[House Hearing, 107 Congress] [From the U.S. Government Publishing Office] THE STATUS OF INSURANCE RESTITUTION FOR HOLOCAUST VICTIMS AND THEIR HEIRS ======================================================================= HEARING before the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION __________ NOVEMBER 8, 2001 __________ Serial No. 107-47 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 77-710 WASHINGTON : 2002 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON GOVERNMENT REFORM DAN BURTON, Indiana, Chairman BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California CONSTANCE A. MORELLA, Maryland TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania STEPHEN HORN, California PATSY T. MINK, Hawaii JOHN L. MICA, Florida CAROLYN B. MALONEY, New York THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington, MARK E. SOUDER, Indiana DC STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland BOB BARR, Georgia DENNIS J. KUCINICH, Ohio DAN MILLER, Florida ROD R. BLAGOJEVICH, Illinois DOUG OSE, California DANNY K. DAVIS, Illinois RON LEWIS, Kentucky JOHN F. TIERNEY, Massachusetts JO ANN DAVIS, Virginia JIM TURNER, Texas TODD RUSSELL PLATTS, Pennsylvania THOMAS H. ALLEN, Maine DAVE WELDON, Florida JANICE D. SCHAKOWSKY, Illinois CHRIS CANNON, Utah WM. LACY CLAY, Missouri ADAM H. PUTNAM, Florida DIANE E. WATSON, California C.L. ``BUTCH'' OTTER, Idaho STEPHEN F. LYNCH, Massachusetts EDWARD L. SCHROCK, Virginia ------ JOHN J. DUNCAN, Tennessee BERNARD SANDERS, Vermont ------ ------ (Independent) Kevin Binger, Staff Director Daniel R. Moll, Deputy Staff Director James C. Wilson, Chief Counsel Robert A. Briggs, Chief Clerk Phil Schiliro, Minority Staff Director C O N T E N T S ---------- Page Hearing held on November 8, 2001................................. 1 Statement of: Brauns, Dr. Jack, Covina, CA; Mr. Israel Arbeiter, Newton, MA; Mr. Arthur Falk, Boca Raton, FL; and Mr. Danny Kadden, Olympia, WA................................................ 44 Eagleburger, Lawrence, chairman of ICHEIC, former U.S. Secretary of State; Ambassador J.D. Bindenagel, U.S. State Department Special Envoy for Holocaust Issues, U.S. trustee for the German Foundation, and U.S. observer to ICHEIC; Peter Lefkin, senior vice president, government and industry affairs, Fireman's Fund Insurance Co., Allianz Group; Nathaniel Shapo, chairman of the International Holocaust Commission Task Force of the National Association of Insurance Commissioners, NAIC representative to ICHEIC; Gideon Taylor, executive vice president of the Conference on Material Claims Against Germany, accompanied by Israel Singer, vice president of the Claims Conference, chairman of Negotiating Committee; and Roman Kent, chairman of the American Gathering of Holocaust Survivors and ICHEIC Members.................................................... 67 Letters, statements, etc., submitted for the record by: Bindenagel, Ambassador J.D., U.S. State Department Special Envoy for Holocaust Issues, U.S. trustee for the German Foundation, and U.S. observer to ICHEIC, prepared statement of......................................................... 76 Clay, Hon. Wm. Lacy, a Representative in Congress from the State of Missouri, prepared statement of................... 42 Lefkin, Peter, senior vice president, government and industry affairs, Allianz Group, prepared statement of.............. 118 Maloney, Hon. Carolyn B., a Representative in Congress from the State of New York, prepared statement of............... 25 Morella, Hon. Constance A., a Representative in Congress from the State of Maryland, prepared statement of............... 20 Schakowsky, Hon. Janice D., a Representative in Congress from the State of Illinois, prepared statement of............... 39 Shapo, Nathaniel, chairman of the International Holocaust Commission Task Force of the National Association of Insurance Commissioners, NAIC representative to ICHEIC, prepared statement of...................................... 92 Shays, Hon. Christopher, a Representative in Congress from the State of Connecticut, prepared statement of............ 5 Taylor, Gideon, executive vice president of the Conference on Material Claims Against Germany, prepared statement of..... 109 Tierney, Hon. John F., a Representative in Congress from the State of Massachusetts, prepared statement of.............. 30 Towns, Hon. Edolphus, a Representative in Congress from the State of New York, prepared statement of................... 162 Waxman, Hon. Henry A., a Representative in Congress from the State of California: Letter dated September 18, 2001.......................... 160 Prepared statement of.................................... 14 THE STATUS OF INSURANCE RESTITUTION FOR HOLOCAUST VICTIMS AND THEIR HEIRS ---------- THURSDAY, NOVEMBER 8, 2001 House of Representatives, Committee on Government Reform, Washington, DC. The committee met, pursuant to notice, at 10:10 a.m., in room 2154, Rayburn House Office Building, Hon. Christopher Shays (acting chairman of the committee) presiding. Present: Representatives Gilman, Morella, Shays, Ros- Lehtinen, Horn, LaTourette, Waxman, Maloney, Norton, Kucinich, Tierney, Schakowsky, Clay and Lynch. Staff present: Kevin Binger, staff director; James C. Wilson, chief counsel; David A. Kass, deputy chief counsel; Mark Corallo, director of communications; Chad Bungard, Pablo Carrillo, Randall Kaplan, Matt Rupp, and James J. Schumann, counsels; Robert A. Briggs, chief clerk; Michael Bloomrose and Michael Layman, staff assistants; Robin Butler, office manager; Josie Duckett, deputy communications director; Joshua Gillespie, deputy chief clerk; Nicholas Mutton, assistant to chief counsel; Leneal Scott, computer systems manager; Corinne Zaccagnini, systems administrator; Phil Barnett, minority chief counsel; Kristin Amerling, minority deputy chief counsel; Michelle Ash, minority counsel; Ellen Rayner, minority chief clerk; and Jean Gosa and Earley Green, minority assistant clerks. Mr. Shays. Good morning. A quorum being present, the Committee on Government Reform will come to order. I ask unanimous consent that all Members' and witnesses' written and opening statements be included in the record. Without objection, so ordered. I ask unanimous consent that all articles, exhibits and extraneous or tabular material referred to be included in the record. Without objection, so ordered. I ask unanimous consent that questioning for panel two of the hearing proceed under clause 2(j)(2) of the House rule 11 and committee rule 14 in which the chairman and ranking member may allocate time to a committee member as is deemed appropriate for questioning, not to exceed 60 minutes between the majority and minority in alternate 10-minute rounds. Without objection, so ordered. I ask that the requests for information the committee has sent out in this matter as well as the responses received be placed in the record. Without objection, so ordered. I understand, Mr. Waxman, that you have a motion. Mr. Waxman. Yes. Before we begin the hearings on the topic today, I would ask unanimous consent that Representative Stephen F. Lynch of Massachusetts be appointed to the Subcommittee on National Security, Veterans' Affairs and International Relations and the Subcommittee on the District of Columbia. Mr. Lynch is a new member of the committee. We want to welcome him today to our committee. He has been a member of the Massachusetts Legislature since 1994, and he has an interest in long-term care and prescription drugs. And when it comes to the issue of post office reform, he has a family connection because his mother has been a postal clerk. We are delighted to have him join us on the Democratic side, and I would request that he be placed on the subcommittees, as I have indicated in my request for unanimous approval. Mr. Shays. Your question is noted. It is part of the record. Mr. Lynch, we are delighted to have you as a member of the committee. Very delighted. Mr. Lynch. Thank you. Mr. Shays. And by unanimous consent, it is approved; and you are, in fact, a member of the committee. That is a lot of power that I have here. I would like to welcome our witnesses, I would like to welcome our guests, and I would like the record to note that this hearing is at the request of Mr. Waxman, eagerly agreed to by our chairman, Mr. Burton, who is not here because his wife is ill. He is with his wife and deeply regrets that he is not here, and I am reading his statement that I concur with, so the ayes are from him. He wishes us good morning and acknowledges we are here today to discuss the International Commission on Holocaust Era Insurance Claims [ICHEIC]. The Commission was created in 1998 to assure that the Holocaust survivors and the families of Holocaust victims receive payment on insurance policies they owned before the Second World War. The United States played a major role in creating the Commission. So did Germany. So did Israel. The hope was that we would resolve these issues once and for all by providing restitution to those who deserve it. Today we want to find out if the process is working or not. Families face serious obstacles in seeking restitution. When the Nazis hauled Jewish families off to concentration camps, their personal documents were confiscated or destroyed. There are no death certificates for millions of people who were murdered at concentration camps. After the war, the new Communist government in Eastern Europe expropriated insurance companies and destroyed large volumes of records. The challenges that these families face are substantial. The Commission was created to try to head off years and years of civil litigation. Former Secretary of State Lawrence Eagleburger was asked to head the Commission. This is a Herculean task, and it has been a frustrating process. He deserves to be commended for taking it on. I appreciate the fact that Secretary Eagleburger is going to be here today. All parties involved in ICHEIC--the Jewish organizations, the insurance regulators and the insurance companies--believe that legitimate insurance claims should be paid. But at this point nobody is very happy with the process or the results. There are a number of serious concerns that we are going to examine today. Very few claims have actually been paid since the ICHEIC process was initiated. Less than 2 percent of all of the claims submitted to the Commission have resulted in offers from the insurance companies. That is something that we are concerned about. We are fortunate to have with us several survivors who have been through this process and can shed some light on the problems that people face. I am eager to hear about their own personal experiences. One of the biggest issues that remains unresolved is whether insurance companies should publish lists of all of their unpaid policyholders. European insurance companies agreed to review their files for all insurance policies held by Holocaust victims. The insurance companies were supposed to publish the names of people holding unpaid policies. However, to date, very few names have been published. As a result, families that have no documentation have very little to work with. To be fair, I should point out that what we are asking these insurance companies to do is very difficult. We are asking those companies to search through archives that go back 60 or 70 years. Those files have been through war, Communist control, and the passage of 60 years. But it simply has to be done. The insurance companies want legal peace. If they want to escape litigation, they have to leave no stone unturned. The families deserve it. Justice requires it. Another issue of great concern is the fact so many European insurance companies aren't participating in the process at all. Only five large companies have joined ICHEIC. These are companies with subsidiaries in the United States. These are the companies that face liability problems in the United States. Many other German insurance companies have resisted joining ICHEIC for too long. By refusing to participate in ICHEIC, these companies are denying Holocaust victims and their heirs a fair shake. Secretary Eagleburger is working hard to try to get these companies to participate. It has been a very frustrating process. I would like to see our State Department communicate to the German Government how important this is. We need to bring closure to this issue. We can't do that unless every company participates. I urge those companies to join the Commission and bring some measure of justice to Holocaust victims and their heirs. There is also the question of who should pay for ICHEIC operating expenses. German insurers have proposed that they should be reimbursed for their administrative expenses. This reimbursement would come from funds that are supposed to go toward paying policyholders. We are talking about tens of millions of dollars that could be used to pay deserving claimants. The reimbursement issue is obviously significant. One final issue that merits our attention is the deadline. Should it be moved back? The Commission deadline for submitting claims is early next year. If there are other valid claims out there that have not yet been filed, the deadline should be moved back. That is why this hearing is especially timely right now. The U.S. Government plays an important role as an observer of ICHEIC. Ambassador Bindenagel, the State Department authority on this issue, is here to give us his perspective on whether ICHEIC is accomplishing its goals. We have an important stake in this issue. We have many Holocaust survivors living in this country. They are our constituents. They deserve to be treated fairly. We have an important foreign policy interest. We have a very strong relationship with Germany. We have worked together for decades. Bringing closure to this issue will make that relationship even stronger. It will also strengthen the ties between Israel and her European allies. But one point has to be perfectly clear. There is only one way to achieve closure. That is to make sure that every family that deserves restitution gets restitution. We have to make sure that every Holocaust survivor feels like he or she is getting a fair shake. A lot of work has been done. Progress has been made. But we are not there yet. My hope is that this hearing can shed some light on whether ICHEIC is working. If not, we need to find out how to fix it. Congress and this committee in particular need to play a productive role in making sure that all Holocaust-era victims are paid what rightfully belongs to them, and we should do everything we can to encourage the German Foundation to participate fully and meaningfully in the claims process. I want to thank all of our witnesses for being here today. I thank Mr. Waxman for his dedication to resolving this issue. This is something that he has been following for a very long time, and now I yield to him for his opening statement. [The prepared statement of Hon. Christopher Shays follows:] [GRAPHIC] [TIFF OMITTED] T7710.001 [GRAPHIC] [TIFF OMITTED] T7710.002 [GRAPHIC] [TIFF OMITTED] T7710.003 [GRAPHIC] [TIFF OMITTED] T7710.004 [GRAPHIC] [TIFF OMITTED] T7710.005 [GRAPHIC] [TIFF OMITTED] T7710.006 Mr. Waxman. Thank you very much, Mr. Chairman. I want to thank you for chairing this hearing and Congressman Burton for calling this hearing today so that we can air what I think is an important issue. Holocaust-era insurance restitution is an emotional and complex subject, and I appreciate that we are getting an opportunity to look at it and the work of ICHEIC, the International Commission on Holocaust Era Insurance Claims. It was 63 years ago this week, in November 1938, that the Nazis' violent and pervasive persecution of Jews was launched with Kristallnacht. For those who do not know, Kristallnacht was a massive pogrom organized by the Nazis against Jewish synagogues, schools and shops. For 3 days, rampaging mobs freely attacked Jews in the street. It was known as Kristallnacht, the night of broken glass, because of the mass destruction left in its wake. By an official Nazi count, during Kristallnacht more than 1,000 synagogues were burned, almost 7,500 Jewish businesses were destroyed and numerous others were vandalized. In addition, thousands of Jews were rounded up and sent off to concentration camps. The repudiation of valid insurance claims started with Kristallnacht. In the days following it, the Gestapo issued an order requiring Jews to be billed for the damage and that any insurance money due them would be confiscated by the state. The Kristallnacht order largely concerned property insurance. But the failure of survivors to receive compensation also occurred with other popular types of insurance like life, health, education and dowry insurance. Jewish families paid premiums for years. Insurance companies prospered from these payments. But when Jews were killed or their property was confiscated or destroyed in the Holocaust, their insurance policies went uncompensated. The situation is especially poignant today. For decades, families have been seeking compensation for those insurance policies. Now they are reaching the ends of their lives, and they may never see justice on this matter. ICHEIC was created in 1998 with the hope that it could help resolve the insurance claims of Holocaust-era survivors and their families who face long-term intransigence by companies that held their policies. But ICHEIC is simply not working very well. The system has failed to ensure thorough identification of policyholders, a dismally low percentage of the claims filed through ICHEIC have been approved, ICHEIC standards have been ignored, the majority of German insurance companies have not even agreed to follow the ICHEIC procedures, and questions have been raised regarding whether ICHEIC has been responsible with its own expenditures. The experience of Judith Steiner is representative. She is a Holocaust Survivor from Los Angeles who contacted me in despair over the rejection of her ICHEIC claim by RAS, a subsidiary of the big German insurance company Allianz. Mrs. Steiner filed her claim with a copy of the receipt for the last premium payment her grandfather paid before the family was taken from Hungary and sent to concentration camps. The company insignia was on the receipt. Yet RAS responded that her claim was denied because the existence of the policy could not be corroborated in the company's files. Some of the concerns that have been raised about the ICHEIC system involve the administrative management of ICHEIC itself. ICHEIC's purpose is to facilitate the compensation of claimants, yet it has spent on itself twice as much as has been offered to survivors and their families. ICHEIC has spent $40 million on salaries, conferences, marketing, and administrative expenses, but only $20.9 million has been offered to survivors, and even less has actually been paid out. An even bigger problem is the actions of the insurance companies. The ICHEIC process imposes a February 2002 deadline for submitting claims applications. It appears that both member and non-member companies are engaged in the strategy of dragging their feet until the deadline has expired or potential claimants have died off. Most of the German companies have refused to join the ICHEIC process. They have spent months offering various proposals that condition the terms under which they would join. For example, media accounts report that such companies are demanding that a significant portion of the funds set aside for insurance claim reimbursement be refunded to those companies as a condition of joining. As a result, families of survivors are caught in a catch- 22. They are facing an imminent deadline to file claims, but they cannot file effective claims without information from these companies about the policies they issued. Most companies that have joined have not vigorously participated. Unfortunately, it appears that, 3 years after the funding of ICHEIC, an exhaustive policyholder list by member companies has yet to be published. One study by a state insurance commissioner estimated that, of a pool of 3 million Holocaust-era policies issued, member companies had produced only 9,000 names by the end of last year. Further, since the establishment of ICHEIC, its member companies have approved survivor claims at an alarmingly low rate. This problem persists even where survivors were able to identify the companies that held their families' policies. To date, less than 2 percent of claims presented to companies have resulted in offers. That really is quite remarkable. Less than 2 percent of the claims presented to the companies have resulted in offers. Thousands of other applications are still in limbo because the survivors who filed them cannot name the company holding their assets. Allianz has been sent approximately 15,000 claims and has made only 4 offers. Winterthur has been sent approximately 6,500 claims and has made no offers at all. ICHEIC established relaxed standards for assessing insurance claims to help Holocaust survivors reclaim their policies and set forth guidelines to help ensure appropriate valuation of policies. Often, however, their claims have been unfairly rejected, undervalued, or issued with confusing explanations. Individuals who have received compensation have often received minimal amounts, some totaling less than $2,000. Time is running out for resolving all of those questions and concerns, as the current ICHEIC deadline for accepting claims is February 2002. I am hopeful that we can accomplish two major goals with this hearing. First, we must assess the concerns raised regarding the ICHEIC system; and, second, we must help determine what remedies may be appropriate to improve the ICHEIC system. At a minimum, one remedy deserves our immediate attention: extending the February 2002 deadline for filing claims. Fundamental reforms to the ICHEIC process would be integral to such a step. I am looking forward to today's testimony. The U.S. Government has played a vital role in pressing for the equity Holocaust survivors and families deserve, and today we will hear from Ambassador Bindenagel. In addition I look forward to the testimony of our other distinguished witnesses. I am pleased that ICHEIC Chairman Lawrence Eagleburger is with us today to help us look into these matters. I want to thank him for making the effort to be here during his recovery from surgery. I also want to welcome the other organizations participating today which, as members of ICHEIC, have tirelessly advocated for the rights of survivors. The National Association of Insurance Commissioners has tried to make sure that European companies and subsidiaries operating in the United States have dealt with Holocaust-era insurance issues openly and honestly. The Claims Conference has been pressing this issue for the 50 years of its existence. And Roman Kent, chairman of the American Gathering of Jewish Holocaust Survivors, has been a strong moral voice on this issue. Finally, I especially want to welcome the Holocaust survivors who have traveled from around the country to share their stories with us. The whole process was set up to help you. Unfortunately, it appears that others are benefiting before you. Mr. Chairman, I appreciate this opportunity for an opening statement, and I look forward to the hearing. Mr. Shays. I thank the gentleman. [The prepared statement of Hon. Henry A. Waxman follows:] [GRAPHIC] [TIFF OMITTED] T7710.007 [GRAPHIC] [TIFF OMITTED] T7710.008 [GRAPHIC] [TIFF OMITTED] T7710.009 Mr. Shays. If the members don't mind, Mr. Foley is here just to make a very brief introduction of one of our witnesses. I would like him to be able to do that so he can get on his way. So, without objection, if we can just recognize Mr. Foley. Mr. Foley. Thank you very much, Mr. Chairman. Those of us, in Ways and Means Oversight, are investigating the Red Cross and September 11th Fund, and how they have used their money. I think it is analogous to the conversation today. It goes to integrity of the system. I am pleased to introduce, Mr. Chairman, a constituent of ours, Arthur Falk, from Palm Beach County, FL, who is now 80 years old. He was present in 1936 when his mother, Elsa Falk, purchased 100,000 Swiss Franc life annuity policy from Winterthur Insurance Co. in Geneva, Switzerland. After his mother was murdered by the Nazis, Mr. Falk came to America and served in the U.S. Intelligence Section of the Bomber Command of the 8th Air Force Station in England. He participated in 20 missions in the Flying Fortress over Germany and occupied Europe. After the war ended, Mr. Falk found documents showing that the Winterthur policy had in fact been issued to Elsa Falk and that the Winterthur was aware of the policy. The company continues to deny its obligations to this day. Mr. Falk tried repeatedly to get Winterthur to honor his mother's policy. The company stiffly refused for years, using all of the same excuses: There is no death certificate; you don't have a copy of the policy; even if the policy is or if there was a policy, it lapsed because your loved one stopped paying premiums during the Nazi period. Mr. Falk was in his late 70's when he found information in Germany that the company claimed it could not find which proved that the company indeed sold his mother the policy and revealed for the first time a policy number. Winterthur continued to refuse, even after Mr. Falk's own research provided that the company has indeed sold his mother a policy. The company still denied payment. Mr. Chairman, I didn't fight to include insurance policies in the Holocaust Commission law 3 years ago to watch insurance companies continue to thumb their noses at Holocaust survivors. That is morally deplorable and reprehensible. While CEOs of these companies are sitting back on their billions, Holocaust survivors and their families are being denied what is rightfully theirs. Mr. Falk not only survived the Holocaust, he was a hero of World War II. To deny this man his benefits is atrocious and should sicken anyone with a conscience. I thank the chairman. Mr. Shays. I thank the gentleman. I also thank the members for allowing us to go out of order. So you can get on your way, sir. I would now like to recognize Mrs. Morella. Mrs. Morella. Thank you, Mr. Chairman. I also want to thank Congressman Burton for this hearing, and I want to thank Mr. Waxman for the incredible work that he has done on it. It was a privilege to hear our colleague, Mark Foley, with his articulation also of the problem before us. So this is a very important issue, whether the families of Holocaust victims are being fairly compensated for insurance policies that they held during World War II. It is a very difficult problem in cities across Europe. As they were swept away to concentration camps, their personal papers were lost or destroyed. Families were separated from their loved ones, never to be seen again. Families scattered and resettled in countries all over the world. Under these circumstances, how do families collect on life insurance policies? There are many cases where children of Holocaust victims remember that their parents had life insurance policies, but they don't have the documentation. In some cases, they recall the name of the insurance company involved, but in many cases they don't. These are very trying issues. These disputes have been going on for more than half a century. But for the sake of families that suffered through the Holocaust we need to bring this matter to closure. That is why the International Commission on Holocaust-era insurance claims was created. This Commission, chaired by the distinguished former Secretary of State, Lawrence Eagleburger-- he has been working on this for the last 3 years trying to solve these problems, and he will be here on our second panel. I also want to welcome the witnesses who have assembled on our first panel, Holocaust survivors. Thank you very much for coming. Thank you for your commitment through the years. They are here to tell us about the problems they faced in this process. We also have several other Commission members whose testimony will be very valuable. One of the real frustrations with this process is that an extremely low number of claims have been settled. According to the most recent numbers that we have, about 40,000 claims or inquiries have been submitted to the Commission. Some of these families have documentation. Many of them don't. But less than 2 percent of those claims have been settled by the companies-- less than 2 percent. In a situation like this, the only way to resolve these cases is for the insurance companies to publish their lists of unclaimed policies. These companies have been reluctant to do that. The process of getting lists from the companies reviewing them and posting them on the Internet has been extremely slow. I think it just stands to reason that when you have thousands of families who lost everything they had, the only way to resolve these cases is for the companies to publish those lists. The companies are in the best position to produce documentation on unpaid claims, and they have a moral responsibility to do so. Another disturbing issue is that many of the German insurance companies are not participating in this process. Right now, five of the biggest European companies are working with the Commission. They are doing that because they were facing lawsuits in the United States. But many smaller companies have resisted cooperating, and that is just plain wrong. Just because these smaller companies aren't subject to lawsuits in the United States doesn't mean that they shouldn't be held accountable. It is a very difficult process. It is time consuming. It is expensive. But every company that wrote insurance policies to people who died in the Holocaust should do everything humanly possible to resolve those claims. I know that Secretary Eagleburger and other members of the Commission, like Mr. Taylor, Mr. Kent, and Mr. Shapo, have been working very hard to solve those problems; and I know it has been the source of frustration. One of the things I would like to know today is how we can help or what we can do to prod the German insurance association to take part in the process. What can we do to try to get these lists published more completely? My point is that there is a deadline. You have heard this mentioned by the other members who have spoken. The deadline is in January or February for people to submit claims. That is really just a couple of months away. There is a lot of confusion. Many companies aren't participating yet. Complete lists haven't been published. I certainly think the Commission ought to take a serious look at extending that deadline. I know that everyone's goal is to bring closure to this matter, but if there is an arbitrary deadline, if all of the issues haven't been resolved, then many families of the Holocaust victims aren't going to have any closure. So, again, I want to thank all of our guests for being here. I look forward to hearing the testimony. Thank you, Mr. Chairman, for the courtesy to give an opening statement. Mr. Shays. I thank the gentlelady. [The prepared statement of Hon. Constance A. Morella follows:] [GRAPHIC] [TIFF OMITTED] T7710.010 [GRAPHIC] [TIFF OMITTED] T7710.011 [GRAPHIC] [TIFF OMITTED] T7710.012 Mr. Shays. I recognize Carolyn Maloney. Mrs. Maloney. I would like to thank the chairman and ranking member for holding this important hearing and especially thank the witnesses, Dr. Brauns, Mr. Arbeiter, and Mr. Kadden for coming to share your stories with us today. I would also like to recognize one of my former constituents, Neil Levin, who was head of the Port Authority, and who tragically died in the World Trade Center disaster. Neil Levin was one of the founding members of ICHEIC. He was last seen on the 63rd floor helping others during the World Trade Center disaster and crash. His courage and compassion at a time of crisis was a wonderful measure of his strength and humanity. As Superintendent of Banks for the State of New York, he created the Holocaust Claims Office within the banking department of New York. He was instrumental in persuading the insurance companies to enter into a memorandum of understanding that led to the creation of ICHEIC. ICHEIC, for all of its faults has enabled Holocaust survivors to receive more money in less time than the Swiss settlement. In many ways, ICHEIC is part of Neil Levin's legacy. More than 50 years ago, we witnessed one of the most tragic episodes of man's inhumanity man, the slaughter of 6 million Jews and millions of others in Eastern and Central Europe during World War II. Some were able to hide or escape death, many with lingering memories and medical conditions that will be with them for life. There are currently 280,000 Holocaust survivors and family members in the United States alone. It is these survivors who in many cases are still struggling to live out their remaining years with dignity. Many of them have contacted the Claims Conference which is located in the district that I represent. Many have come to my office for help to receive the benefits they are rightfully owed, and I would like to cite two examples that have come to my office. One woman made a claim based on the deposit receipt issued by a bank. Before her parents were deported, they went to a bank and put all of their valuable documents in a deposit box. They received a receipt listing the contents, including a RAS policy, which is an Italian subsidiary of the German insurance company Allianz. During the war, the box was looted and the contents taken. The insurance company says that the bank receipt doesn't prove that the policy existed. Another survivor who came to my office and into the claims court had a diary that survived the war. In the diary an insurance policy and number is listed. The insurance company says that the diary could have been forged and that this isn't sufficient proof that the policy ever existed. It is for these people and too many more that I and many of my colleagues request--demand that the insurance companies publish all of the information regarding policies issued to people before and during the war where no claims were made. So far, the insurance companies have given only partial information. We need a list of thousands and thousands of policies that were issued during that era where no claims were paid out and the names of the policyholders. We owe it to the past. We owe it to the truth. With every year that goes by, more and more survivors pass away. They cannot wait any longer. Time is of the essence. Those who are alive now were young then. Many of them did not know what financial arrangements their parents or other relatives made. Not surprisingly, more than 80 percent of all applicants filing with ICHEIC could not name the company holding their assets. Now they are in the twilight of their years. If the insurance companies would publish the names of policyholders, survivors could check to see if their families are listed. Under the current system, they are left guessing, filling out applications, waiting and wondering but, more often, being denied. To date, almost 40,000 claims have been presented to companies, but only 545 offers have been made, while 92,295 claims have been denied. This system is simply unfair to the survivors. It needs to be streamlined, and the list must be published. Thank you very much, and thank you for coming. Mr. Shays. Thank the gentlelady. [The prepared statement of Hon. Carolyn B. Maloney follows:] [GRAPHIC] [TIFF OMITTED] T7710.013 [GRAPHIC] [TIFF OMITTED] T7710.014 Mr. Shays. At this time, I recognize Mr. Gilman from New York. Mr. Gilman. Thank you, Mr. Chairman, and thank you once again for conducting an important hearing. Mr. Chairman, today's hearing on the status of insurance resolution for Holocaust victims is extremely important and necessary since it examines the efforts of the International Commission on Holocaust Era Insurance Claims, the ICHEIC group, and whether the Commission that is chaired by a devoted public servant and our good friend, former Secretary of State Larry Eagleburger, is ensuring timely, efficient and appropriate resolution of Holocaust-era claims. It is the responsibility of the International Commission on Holocaust Era Insurance Claims, a nonprofit entity comprised of survivors, representatives, United States and European insurance regulators, the Israeli Government---- Mr. Shays. Would the gentleman suspend just a second? I would welcome any other member who would like to go now to vote, and I will let them convene if I am not here to convene and start so we can continue the statements without having to hold our guests. So if anyone would go and vote now, you can come back and just convene and give your statements. Thank you. Mr. Gilman [continuing]. Also comprised of Allianz, AXA, Winterthur, Zurich and Generali insurance companies, to make public the names of policyholders, developing and enforcing relaxed standards of proof for resolving claims and overseeing audits of member companies to assess their compliance with ICHEIC rules. Pursuant to the rules, the deadline by which all claims are going to have to be filed is fast approaching. And while there appears to be some dispute regarding whether the date is January 31, 2002, or February 15, 2002, what is not in dispute is that after those dates the insurance companies will no longer be obligated to accept and process new claims. We are here today to listen to our witnesses, and we thank them for taking the time to be with us, and to determine how ICHEIC and the insurance companies are dealing with this particularly painful period in not only our Nation's recent history but a period in the 20th century that ranks among the world's most barbaric periods of humanity. During this time, not only did the Nazi regime murder more than 6 million of Europe's Jews, but they also stole their property, and those who survived and their heirs saw little or nothing of what property remained or received any compensation. In fact, following World War II, many Holocaust survivors and their heirs contacted European banks and insurance institutions to seek compensation on their claims but were turned away due to a lack of documentation. The treatment that our survivors received as they sought to rebuild their lives is reprehensible, and our Nation and its allies must work diligently to try to right this terrible wrong. We have to right these wrongs and do it while there is still time, and ICHEIC cannot perform its job without the full cooperation of its participating insurance companies. A recent article from the May 14th issue of Forbes magazine quotes Herbert Hansmeyer, the managing director of Allianz, which is charged with overseeing the insurance giants, Western Hemisphere operations and an ICHEIC participant, as stating, regarding those claims, ``ultimately, it is an act of public appeasement. I cannot become emotional about insurance claims that are 60 years old,'' said Mr. Hansmeyer. I find that particularly distressing, particularly because while, as Allianz pocketed insurance premiums and enjoyed a special relationship with the Nazi regime, its policyholders were being exterminated in death camps with names like Auschwitz, Bergen-Belsen and Dachau, to name a few. Managing Director Hansmeyer is wrong! There is a lot to become emotional about regarding Holocaust-era insurance claims and about the untimely settlement of them. I have been actively involved in making certain that our survivors and their heirs receive due financial compensation in a manner that is expeditious and painless as possible for them. My State of New York is one of the few States that has enacted a law that penalizes companies that fail to report the name of any Holocaust-era policyholder to either the State insurance office or to ICHEIC. What is troubling to our committee is the rate at which the claims are being processed and the number of claims rejected versus those accepted and paid, as well as the issue of publishing the names of all potential Holocaust-era policyholders. I understand the difficult task that Secretary Eagleburger and his team have and the time constraints all of us are operating under. Rather than sit here and point fingers at ICHEIC, I feel it is more productive to ascertain what they are doing to expeditiously process the claims and respond to the needs of all prospective claimants and what all of us can do to make certain that all of those entitled to compensation will have their claim applications filed prior to the January or February 2002 deadline and that the Austrian and German Governments abide by their agreements entered into to facilitate the publication, processing and payment of Holocaust-era insurance claims in full accordance with ICHEIC's rules. I understand that these agreements were entered into after ICHEIC was established, but, nonetheless, a solution must be found to honorably settle all of the outstanding Holocaust-era insurance claims for our survivors and for their heirs. I thank the witnesses for appearing before us today. I thank our chairman for conducting this hearing, and I will look forward to their remarks on this important, sensitive issue for Holocaust survivors and their heirs. Mr. Shays. I thank the gentleman. We are going to try to recognize Mrs. Norton and Mr. Tierney. Mr. Tierney, do you have a short statement? Mr. Tierney. So short it is amazing, as I really want to hear from the panel. Mr. Chairman, I thank you. I think what we are trying to do here is the right thing to do, to assess the performance of this and to move forward on that. I will submit my statement for the record and allow you to move on and to allow these gentlemen to be heard today. Mr. Shays. Thank you, Mr. Tierney. [The prepared statement of Hon. John F. Tierney follows:] [GRAPHIC] [TIFF OMITTED] T7710.015 [GRAPHIC] [TIFF OMITTED] T7710.016 [GRAPHIC] [TIFF OMITTED] T7710.017 [GRAPHIC] [TIFF OMITTED] T7710.018 [GRAPHIC] [TIFF OMITTED] T7710.019 [GRAPHIC] [TIFF OMITTED] T7710.020 Mr. Shays. Ms. Norton. Ms. Norton. Thank you, Mr. Chairman. Here we are in the midst of another war of fanaticism with ethnicity and religion at its center and we are still trying to resolve claims from the last World War. It is insult on top of injury that the ICHEIC remedy has been so ineffective. I don't think that we can let this matter stand without trying to find out what happened. The bottom line, as far as I can tell, is that ICHEIC has not worked. It has been like Sisyphus rolling a stone up some hill. The remedies do not come forward. Time is running out, or somebody is trying to run the time out. It seems to me, Mr. Chairman, that we will have no alternative but to see that there is an extension of the deadline for ICHEIC so as not to let the forces that were involved defeat the very claims for which they are likely responsible. I thank you, Mr. Chairman. Mr. Shays. I thank the gentlelady. What we are going to do, as far as the first member who comes in, Democrat or Republican, we are going to hand them the gavel, and they can start their statements. We are adjourned until they call us back into session. [Recess.] Mr. Waxman. Now we will continue with the opening statements for members of the committee. And I want to recognize the gentleman from Ohio, Mr. Kucinich. Mr. Kucinich. I thank you very much, Mr. Chairman. I want to tell Mr. Waxman how much I appreciate his work to make sure that the International Commission on Holocaust Era Insurance Claims [ICHEIC], is proceeding along a path of effective resolution of the claims, and I want to thank you for your dedication in that regard. I have to say, Mr. Chairman, I am very concerned about the pattern of facts and evidence laid out before us today. It strongly suggests that the German insurance industry has little intention of restitution. The credibility of any insurance company rests on trust. In case anyone didn't hear that I will go over that again. The credibility of any insurance company rests on trust that when people pay premiums up until their death, that their survivors, their beneficiaries, are entitled to payment. Holocaust survivors and their families have had their suffering compounded, and I hope this hearing will add to the momentum to creating relief for these families. When you go over the record and you see that people were denied claims because their documents were confiscated in the ghettos or concentration camps, because they didn't have documents because their family members were murdered in gas chambers or murdered by Nazi death squads, I have to tell you as someone who looks at this, that on its face it cries out for justice. There is a time when insurance companies have to stop acting like insurance companies and start beginning to act like they have some connection with the rest of the human race. When a person harms another person, they really have three options. The first is to feel honest sorrow and to make amends, or, in this case, restitution. The second option is to defend your actions. Thankfully that's not the case here. The third is to admit your wrongs and to make amends and to pay a penalty. Now, this insurance industry seems to have admitted its wrongs and made available funds; however, it's been suggested that the industry is withholding key evidence and therefore limiting its liability. My message today, then, is very simple. The insurance industry here can heal these wounds or they can let the wounds linger. It's a matter of moral responsibility as well as smart business to make amends now. Efforts for insurance restitution are important for those who suffered in the Holocaust. But it's not just important for them, I submit it's important for the world. We must not and we cannot forget the Holocaust, and we must never forget its victims. And I would submit that as long as uncompensated claims of the Holocaust remain unsatisfied, justice remains unsatisfied. So while this hearing will proceed, I expect, and in a very gentlemanly tone, do not mistake that for a lack of commitment that Members of Congress have to pursue this issue, to not let it go. And I want to again thank Mr. Waxman for his dedication on this and to let him know that he has allies all over this country. Thank you. Mr. Waxman [presiding]. Thank you very much, Mr. Kucinich, for your very powerful statement. The Chair wants to recognize Ms. Schakowsky for opening comments. Ms. Schakowsky. I want to be on record as thanking Chairman Burton for convening this hearing today and to express my gratitude to our ranking member for the outstanding leadership he has demonstrated on behalf of Holocaust victims and survivors. He and his staff should be commended for the substantial time that they have invested in this issue. My District includes Skokie, IL, home to perhaps the largest concentration of survivors in the country, and this hearing means a lot to them. I appreciate the committee's willingness to focus members' attention on this subject. We're fortunate to have with us today extremely distinguished witnesses; a lot of friends and familiar faces are here with us today. I want to extend a special welcome to Nat Shapo who is director of the Illinois Department of Insurance and has been extremely helpful to my staff and me and has spent a lot of his time focusing on issues of importance to survivors. The most important voices we'll hear today are the survivors who have traveled here today to help us understand the devastating impact of the Holocaust and the subsequent decades of frustration working for some small measure, some semblance of restitution. Today we're focusing on ICHEIC, on the organization set up to resolve insurance-related issues. I have numerous concerns about the process, the lack of cooperation by insurance companies, the length of time it's taken. Survivors are an aging population, and the fact that so many issues remain unresolved and so many survivors and heirs have yet to receive a dime is simply reprehensible. On November 10, 1997, I participated in a hearing in Skokie that was convened under the leadership of Deborah Senn, who at that time was Washington State's Insurance Commissioner. Danny Kadden, who is here today was there as well. We heard compelling testimony by people like Erna Gans, a leader in the survivor community who never received payment for the dowry insurance her father purchased for her when she was born. Unfortunately, Erna and so many others have already passed away. There are still some 10,000 survivors in Illinois, and it is my understanding that roughly 1,100 of them have filed claims for insurance. To my knowledge only a handful, 14 have received offers for payments. I understand there is a deadline for filing claims and I'm aware that serious outreach was conducted, but I have a lot of concerns about this deadline. It's unfair, if only symbolically, to give survivors such a short time to apply when these companies have been stalling for a lifetime. This is an issue that goes beyond urgency. There are serious problems that need to be resolved, and Congress has a responsibility to make sure that it's done so that those who have lived to recall the Holocaust may also have some measure of justice and dignity paid to them. I have a number of specific questions for our witnesses, and I look forward to the testimony and again thank Mr. Waxman and the Chair for this opportunity. Thank you. [The prepared statement of Hon. Janice D. Schakowsky follows:] [GRAPHIC] [TIFF OMITTED] T7710.021 [GRAPHIC] [TIFF OMITTED] T7710.022 Mr. Waxman. Thank you, Mr. Chairman, Ms. Schakowsky. And I do want to acknowledge the fact that one of the reasons we're holding this hearing today is you have been adamant in trying to get to the bottom of this whole issue and I thank you for your leadership. Mr. Clay, do you wish to make an opening statement? Mr. Clay. Mr. Waxman, good morning, Mr. Chairman and members of the committee and the panel of witnesses. Today this hearing will scrutinize the efforts the International Commission on Holocaust-Era Claims and whether ICHEIC is efficiently resolving the insurance claims. We have several issues, problems, and questions that need to be addressed. The rate of claim approval is unacceptably low. The failure of companies to publish policyholders' names are subjected to privacy laws in other countries. However, when there are over 3 million Holocaust-era policies and only 9,000 names have been published, we have to address this. We have to address the problem of a January or February deadline. Why do we have an imminent deadline and we do not have the names of all policyholders and, additionally, all insurance companies have not finalized the terms of their participation? It appears that efforts are being made to terminate a process before the logistics are in place to implement it. This is just not right. Why has there been 10 times more money spent on salaries, meetings, and expenses than on claims? For the survivors it is not just the closing of the business end of the estates in question. Rather, it is the emotional closing of decades of anguish and angst over the inability to have a final settling of affairs of so many family members. This for many is an open wound that never heals. Let us assist in bringing relief to the surviving families that allows them to have a more peaceful existence. We must find ways to exponentially raise the 2 percent settlement rate for submitted claims. I know that it isn't easy for the various countries, insurance companies, or the families, for everyone involved in the process. We simply have to get the job done. Mr. Chairman, I ask to submit my remarks for the record. Mr. Shays [presiding]. That will be done. [The prepared statement of Hon. Wm. Lacy Clay follows:] [GRAPHIC] [TIFF OMITTED] T7710.023 [GRAPHIC] [TIFF OMITTED] T7710.024 Mr. Shays. Well, I want to thank the patience of our witnesses and just say that in speaking with other members, it's a very important issue and members did want to address it before you spoke. We will now hear testimony from the first panel which includes Dr. Jack Brauns, Israel Arbeiter, Arthur Faulk, and Daniel Kadden. And I would ask that you stand and we administer the oath as we do in this committee, and then we will hear the testimony. If you will stand and raise your right hands. [Witnesses sworn.] Mr. Shays. Just note for the record that we have sworn in all of our witnesses. The only one who has never been sworn in, and chickened out, was Senator Byrd. We will start with Dr. Brauns. STATEMENTS OF DR. JACK BRAUNS, COVINA, CA; MR. ISRAEL ARBEITER, NEWTON, MA; MR. ARTHUR FALK, BOCA RATON, FL; AND MR. DANNY KADDEN, OLYMPIA, WA Mr. Brauns. Thank you very much for inviting me. I'd like to take the opportunity of giving you the mosaic of the situation of my tragedy, and I would also ask you to give me 2 extra minutes. I time myself and---- Mr. Shays. Well, we'll hit the clock and then we will roll it over for 2 extra minutes. Mr. Brauns. OK. Thank you very much. Now, the mosaic of life in 1930, Europe was already in turmoil and most of the parents tried to do one thing: to get an insurance for the education of their children because this was extremely important, and my father was not a pioneer. There were many other people who turned to insurance companies. This was the only way of providing, the funds for the education of the children. So my father turned to Riga Insurance Co. and Assicurazioni Generali. Why Assicurazioni Generali? Assicurazioni Generali was one of the biggest companies in Europe and they enticed people with two items. The first item, that the premiums have to be paid in dollars. That was the requirement, to have the maturity of the insurance to be paid in dollars, and my father got this special permission of the Lithuanian--where I was born, I'm Lithuanian by birth--to get a special permission to obtain dollars to pay the insurance company. The second enticement was that during the war the premiums didn't have to be paid. They kind of abolished the premiums to be paid during the war. So the premiums were paid until 1940, when the Russians came and occupied Lithuania. That was a year after the war already started. The war started in 1939. So the premiums were paid. This enticement in the insurance that I know that I had was for my education. Nobody had to die. I didn't need a death certificate. Now, I was liberated after 4 years of concentration camps. I was liberated in Dachau on April 29, 1945, by the Third American Army. My father went back to Lithuania to look for my mother and my brother. He found my mother and my brother was unfortunately killed in Stuttgart Concentration Camp. Before he went to look for my mother, my father told me ``Go to Italy. Your education is paid in Italy.'' And it was a very difficult time after the war to go to Italy. We had to go to Hungary, and then we had to go to Austria and cross the border. It was a nightmare, but I got to Italy and I enrolled in the University of Medicine at the University of Torino, Faculty of Medicine. The problem was my whole income was $10 which was given by UNRA, United Nations Refugee Administration. And this $10 I learned to live on, but it was not enough as soon as I joined the faculty of medicine. In the policy--and I'm one of the fortunate. I have the policy with me here, I will show you a little later. At that time I didn't have the policy. My father went back to Lithuania and he--it was buried, and fortunately he found it and it had only the number 332, and with this number I went to Rome and visited the Assicurazioni Generali headquarters on Piazza Venetia. When I got there, they looked at the number and said, ``Well, we will look at it. Give us your address, you're studying in Italy. We will contact you as soon as we found out.'' I never heard from them. In 1960 I was very fortunate that Vice President Nixon gave a letter to Mrs. Kruschev to let my parents out of Lithuania. Maybe some of you know, maybe you don't. And in 1960 my parents were the only people who left Lithuania. And my father and mother came to live with us in California. He brought with him the original policy. So I'm fortunate that he had the foresight to bury it and that it wasn't found by people who were trying to look for peoples buried things in the ghetto. Well, in 1960, I went back to Italy, I went again to the Assicurazioni Generali the original policy. They looked at it. They were very excited to see it. The policy was issued in Triesta and has a stamp of Triesta--I mean the original was issued in Triesta. They shook their head. They took my address in California. I never heard from them. Then I was very fortunate that Rabbi Cooper, the dean of the Weisenthal Center in Los Angeles, went to Triesta and I asked him personally to stop at the headquarters of Triesta. He's a good friend of mine and he did it. He went down and he presented them a copy of the original. He didn't want to take the original. And they shook their head and said they will contact us. Well, 2 years later, we didn't hear anything. Two years later, I got the letter from ICHEIC, and this is the biggest tragedy. You're talking about ICHEIC. In the policy-- and you will read it, how it's written, not only in numbers but only spell them out. It's only a $2,000 policy. That was the money that they were supposed to pay me. Now, I want to tell you that I was starving in Italy as a student because $10 was not enough for me. So the money that I had to substitute for books and other things came from my food. And after 4 years of camps, it was not a big pleasure to cut the amount of food that was available to me. But anyhow, Rabbi Cooper went, and 2 years later I got a letter from ICHEIC with a big explanation. Please help me to understand the letter. It says that my policy basically is worth nothing because it was written in Lats, which is Latvian money, and Lith, Lithuanian money; but they haven't read my policy, because I would like you to read it today and see what it says. My conclusion is that ICHEIC never read my letter and made a judgment somehow saying--and they offered $5,000, said that would be enough because it's worth nothing. And I didn't even get it, Rabbi Cooper got it. Anyhow, the maturity in the policy is written and we will see it, that on September 25, 1945, the policy is mature, and the value of $2,000 will be paid in dollars. See, the Italian company is counting on not to have a lawsuit. I have lived in Italy for 6 years and I got to know a lot of very important people. And just to make an answer to the comment that I heard before at Generali's headquarters which is in Triesta. They have a building for records. There were no floods there, no earthquakes, and no fires. And I was told by a very close friend of mine, the director of Generali who just finished his duty of being director 2 years ago, not one document is missing. Why did they deny me when I was so hungry? I mean, $10; I mean, it's hard for you to understand to live on $10 and go to school. But I finished. In spite of that, I finished by determination. Maybe later I'll give you more answers if you ask me, but anyhow---- Mr. Shays. Let me just encourage you to kind of wrap up because we're almost going into 10 minutes. Mr. Brauns. Yeah. What I'm asking is ICHEIC has interfered in my lawsuit. I filed a lawsuit, and I cannot pursue it because ICHEIC said it would interfere in the commerce between Italy and United States. And the insurance company broke the trust that my father took on himself. He trusted them. He's not the only one, and this is a big trust breaking by an insurance company. In my family alone, there were four physicians and two doctors in chemistry. I know they had insurance, but I cannot prove it. With my parting from this world, the insurance company is the winner. They have never released the name, and they engaged in fraud. What did they do in fraud? Because they gave the list to Yad Vashem and Yad Vashem, a clause that says--they had to find the Jewish names, but they couldn't release the names because they paid them for the contract. The contract says you cannot release the names. So they go around and say, well, we gave the names to Yad Vashem. But you call up Yad Vashem now, they say, yes, we have the names but we cannot release in the contract. So I beg you not to interfere in the lawsuit. Let me sue them. And the reason they're afraid from a lawsuit because Generali has just applied and has gotten from them, Italian Government, the funds for retirement that they administer, and they didn't want any lawsuit or any negative feelings. And I feel that ICHEIC has contributed for them achieving something which is fraud. And I want to say one more thing. My father said a woman can either be pregnant or not. There is nothing in between. And the same thing goes with honesty. Either you're honest or you're not honest. You cannot be honest in the morning and dishonest at night or vice versa. Thank you very much. Mr. Shays. Thank you very much, Dr. Brauns. Mr. Brauns. I will be glad to answer any questions. Mr. Shays. And I think you will have an opportunity to make any other point you wish. The committee really values your testimony and---- Mr. Brauns. I did it in 5 minutes. Mr. Shays. No, you did it in 10. And I was thinking you did a perfect job, and we were delighted to hear from you. Mr. Brauns. Thank you very much. Mr. Shays. And we think of your being in a concentration camp for 4 years, and it takes our breath away. You honor us by being here. Ms. Ros-Lehtinen wants to just make a very brief introduction of someone---- Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman. I appreciate the time. I'd like to welcome my congressional constituent and my dear friend, Mr. Samuel J. Dubbin to our hearing today. Sam has and should be recognized for the work that he's done for many years for our country and especially for survivors of the Holocaust. In 1993 Mr. Dubbin served as special assistant to Janet Reno and as deputy assistant to the Attorney General for policy development. Sam served on the Florida Transportation Commission and has more recently served an appointment on the Miami Dade County steering committee. Mr. Dubbin is a committed member of several Jewish community groups in my area of south Florida and is a strong advocate for Holocaust survivors, not just in our community but throughout the United States. He has defended members of the State Holocaust Education Task Force and has worked to establish a Hate Crimes Act which would toughen criminal penalties. Sam Dubbin currently serves on the Board of Directors and the Executive Committee of the Greater Miami Jewish Federation. He's the chairman of the Community Relations Committee of the Federation's Jewish Community Relations Council. In 1992, Sam received the Federation's Stanley C. Myers President's Leadership Award, and in 1993 he received the Partners with Israel Award from the new leadership of Israel bonds. Sam has distinguished himself as an outstanding member of our south Florida community, and I welcome him here to our hearing today because he has a lot to offer on this subject, and I thank you, Mr. Chairman, for the opportunity. Mr. Shays. I thank the gentlelady---- Ms. Ros-Lehtinen. He's the good looking guy there with the red tie and the mustache. Mr. Shays. We welcome you here. Thank you. I just also want to thank again Mr. Waxman for allowing us to go out of order but also for his request that we have this hearing. I am just so grateful that you made that request. Mr. Arbeiter. Mr. Arbeiter. Mr. Chairman, members of the committee, I would like to thank you for inviting me to testify today regarding a matter that is of great importance to my fellow Holocaust survivors, and I appreciate being given the opportunity. And with your permission, Mr. Chairman, I would like to express my most sincere thanks to the staff of this committee for their hard work and for the help and assistance that they gave me in coming here and being able to appear here today. Thank you very much. I was born in Plozk, Poland, one of five sons of Isaac and Hagara Arbeiter. My father was self-employed as a custom tailor. In addition, he employed two other tailors and an apprentice. As such, my father made a comfortable living. He was considered to have a middle class income. In order to protect his family in case that something were to happen to him, my father purchased a life insurance policy. However, unable to pay premiums a year in advance, my father periodically made payments to the insurance company. Every week, an agent of the insurance company would call up on our house and collect the premiums. He wrote the date and amount in the booklet that was given to my father for that very purpose. I remember distinctly when my siblings and I asked my father why this man was coming every week to collect money, we were told that payment was security for your future. Unfortunately, our future was anything but secure. In September 1939, World War II broke out and Nazi Germany occupied Poland. On February 26, 1941, in the middle of the night, following the orders of SS storm troopers, we were ordered out of our homes and required to leave virtually everything behind, including the life insurance policy paperwork and the booklet in which the agents of the insurance company recorded my father's payments. From there we were taken to concentration camps. My parents and my younger brother were later gassed to death in a camp at Treblinka. Two of my brothers and I spent the next 4 years in various concentration camps, including Auschwitz. Then by some miracle the war ended and I was liberated. While living in Germany, once a semblance of normality had returned, I attempted to pursue my father's insurance policy. I tried to find out whether the policy could be cashed in, since my father had perished a few years before. However, my efforts were unsuccessful. Soon thereafter, I moved to the United States. In 1986, I traveled to Poland and visited the house in Plotz in which we lived, hoping to find any items that used to belong to my family. However, the people who then occupied the house told me that there was nothing remaining. It was not until the fall of the year 2000 that I was informed about the existence of the International Commission of Holocaust Era-Claims, ICHEIC, and the availability of claims forms. Upon learning of the commission, I obtained a claim form and filed a claim. I then received a letter dated December 7, 2000, with the claim No. 00067890, in which it was stated that all member companies will investigate your claim and report their findings within 90 days. Now, almost a year since the claim was filed, I have yet to hear back one way or the other from ICHEIC. I called the Commission several times; however, each time I've been told that the Commission has not heard back from the member insurance companies. I'll read a letter that I have received from the International Commission of ICHEIC. Dear claimant, thank you for sending us your claim. We have passed your claim to all member companies of the Commission that could solve the insurance covered in the information you provided. The companies will investigate your claim and report their findings within 90 days. If a member company traces a policy mentioned your claim and decides either to make an offer or to decline your claim, they will write to you directly or send a copy to us. Member companies that find no trace of any policy mentioned in your claim will inform us. If no member company finds any policy mentioned in your claim, we will write to advise you as soon as all member companies complete investigation. Please bear in mind that unless the companies find a match, their findings need to be passed to us and we cannot respond to you until we hear from all the companies. We hope to be able to advise you within 90 days, but this could take a little longer if any one company takes the full 90 days. We have assigned the following number to your claim. Please, will you keep a record of this and quote in any future correspondence of this. Your claim number is 00067890. If you have any further inquiries, please do not hesitate to call our help line. Mr. Chairman, I am 76 years old. I don't have much longer to go nor do many of my fellow survivors. As such time is of the essence, I appeal to you and to the members of this committee to assist us. Please, please, do not allow the insurance companies to retain that which rightfully belongs to us. We cannot allow others to profit from what has been one of the greatest atrocities in human existence. Thank you for your time, and I appreciate being given the opportunity to speak to you regarding a topic of great concern to many Holocaust survivors. Thank you very much. Mr. Shays. Thank you Mr. Arbeiter. Mr. Kadden. Mr. Falk. We'll go on to Mr. Falk. You were next on our list, but you were fourth on the table. Mr. Falk. Good morning. Mr. Shays. Good morning. Mr. Falk. I want to express my thanks to the committee for holding these hearings, and especially to Chairman Shays and Congressman Waxman and Congressman Foley for assisting me in telling the Congress about my insurance with Winterthur Life Insurance Co. and with ICHEIC. I was born in Hanover, Germany in 1921. My parents owned a very successful cattle brokerage business as well as a very substantial amount of valuable real estate in and around the city of Hanover. Throughout my childhood, our family had a very high standard of living. My brothers and I attended private schools in Europe. When in 1936, around September, when I was 15 years old, my mother and I packed up a very large amount of money, German mark bills, tightly rolled up into a thermos bottle. We traveled to Geneva, Switzerland, to the home office of Mr. Siegrist, a Winterthur insurance agent. At Mr. Siegrist's insistence, my mother exchanged the marks into Swiss francs in order to be able to buy a Swiss franc policy. I witnessed my mother hand over a great deal of money to Mr. Siegrist and sign some papers. She told me after we left that she had bought insurances which would pay out money to her when she left Germany. My mother sent a letter to my brother in the same year, in 1936, in which she reported her efforts to provide for her future. It mentioned all kinds of ways she was getting money out of the country and specifically mentioned the insurance from Winterthur. My brother saved the letter for his entire life. The letter was dated December 1936, and it said: ``I'm paying a life insurance which I made in Geneva. In case of my death, get in touch immediately with Siegrist in Geneva. Insurance is Winterthur. I also get a payout during my lifetime. That at least is something from which I can live at a later date in a foreign country. You see, I'm constantly working at it.'' My mother sent me to live with my brother in New York when I was 17 years old, in 1938. We stayed in touch with my mother who was trying every possible way to leave Germany. This became more urgent after Krystalnacht in November 1938, for which we have just witnessed the 63rd anniversary. Unfortunately, she never made it to safety. After Pearl Harbor in December 1941, we never received any more information--communications, rather, from my mother. I never saw her again. During World War II, as a citizen of the United States, I served in the intelligence section of the Heavy Bomber Command of the Eighth Air Force. I served 4 years in the service, and I was stationed in England most of my time. I flew 21 missions in a heavy bomber, B-17, a flying fortress over Europe. When the war ended, I joined the military government in Germany around 1945-46, and I was stationed in Germany. My first goal was to find out what happened to my mother. It was not easy. Eventually the allied military authorities informed me that she was deported by the Nazis from Hanover to Latvia, to a death camp in December 1941. While I was in Europe, I took the opportunity to try to deal with my family's affairs. In 1946, I personally visited Winterthur's Geneva office and tried to redeem my mother's insurance policies. The company only confirmed at the time that it had a record of policy, but refused payments because I could not produce a death certificate of my mother. I visited other Winterthur offices in the 1940's, but the company still refused to pay. I even mentioned this to Siegrist, but it didn't help at all. The company even refused to accept the Allied Military Government records documenting my mother's fate. The company also refused to provide me with any information about my mother's policies. In the early fifties, the German Government instituted a program to provide monetary reparations for Holocaust victims known as the BEG law. Because of Winterthur's denial, I applied to the German Government for compensation for my mother's unpaid Winterthur policy of 1961. The German Government denied my request in around 1963, but we did not appeal because we had many other claims for our property in Germany. For the next 35 years, I occasionally approached Winterthur for payment of the policy, for copies of the policy, of any kind of information in its files concerning the policy, but Winterthur continued to deny my mother's policy. I really did not press the matter because, quite frankly, it was becoming very painful. In 1997, I restarted my efforts to collect the Winterthur policy after I saw the news about the bank guard who found a Swiss bank shredding records relating to Jewish accounts. I thought this is exactly what must have happened to my mother's policy. I began correspondence with Winterthur, and the company continued to deny all my requests. They were very polite about it, but they still denied everything. After several months I contacted the Florida Department of Insurance which assisted me in pursuing a claim under the ICHEIC. In late 1998, through a record request which I made to the German Government, I obtained copies of materials contained in the German BEG file. For the first time I saw some of the material Winterthur presented in the early 1960's which acknowledged that Mrs. Falk had indeed purchased a policy in Geneva, Switzerland in 1936, with a policy number of 46593. That was the first time I learned about my mother's Winterthur insurance policy number, and I immediately notified Winterthur of my discovery. Once I showed Winterthur the records I found, Winterthur finally admitted that, yes, there was at least one policy sold to my mother. A few months later, the company also confirmed that Mr. Siegrist was their employee and that the policy was in fact underwritten. But they have now asserted two new grounds for denial: The premiums lapsed and the policy was illegal because German law forbade German citizens in 1936 to purchase insurance in Switzerland. The most recent offense was actually asserted to an employee of the Florida Department of Insurance in March 2000. Of course, this did not stop Winterthur from taking my mother's money in 1936. Winterthur's 1961 correspondence does indicate that my mother's policy lapsed because she did not pay the premium through January 1938. And Winterthur's position: She only paid five quarters' worth of premiums. I find this explanation very odd because she paid Siegrist a lot more than 2,100 Swiss francs. Winterthur claims it's all that they paid. And when I say ``a lot more,'' I mean a lot more. She smuggled thousands and thousands of German marks for the purpose of buying that insurance. Still Winterthur says they're sorry, but they don't owe anything if the premium was paid before the 3- year minimum before the policy converts into an annuity or fixed obligation. Mr. Shays. Mr. Falk, if I could ask you a question, you've been 10 minutes, and your testimony is essential. I'm just curious how much longer it will be. Mr. Falk. Mr. Chairman, can I ask you for 1 minute, please? Mr. Shays. I will definitely give you that. Is that what you can do? You can finish up in a minute. Mr. Falk. I beg your pardon? Mr. Shays. Do you think you can finish up in a minute? Mr. Falk. Yes. Mr. Shays. Why don't we do that? Mr. Falk. Thank you. So even though Winterthur now admits what they previously denied about my mother's policy and Mr. Siegrist, that they still turned me down, I was shocked because the whole purpose of ICHEIC was for the companies to apply relaxed standards of proof. In addition, Winterthur's denial, based on a lapse in policy premiums occurring in 1933, is a violation of Chairman Eagleburger's ICHEIC ruling. Winterthur turned me down under ICHEIC in 1999. The ICHEIC rules said if I used ICHEIC's appeal process, I would have to waive my rights in the courts or to the courts. Since Winterthur, as a board member of ICHEIC, had basically ignored my whole premise of ICHEIC, I didn't see any purpose of giving up my legal rights for an ICHEIC appeal. Therefore, I hired an attorney and filed a lawsuit in Federal court in south Florida. Now we are litigating Florida's jurisdiction over Winterthur. I really can't see when we will have a decision on the merits. But Winterthur ignored ICHEIC and there was no remedy except for me to go to court. Mr. Shays. Thank you, sir. I appreciate your testimony. Mr. Kadden. Mr. Kadden. Thank you very much, Mr. Chairman, Congressman Waxman, members of the committee. I will attempt to be succinct in the interest of time, although the subject matter as you can see is a very complex one and we all struggle with it. My name is Danny Kadden. From 1997 until early this year, I staffed the Washington State Holocaust Survivors Assistance Office, a special project under the direction of the Insurance Commissioner of Washington State. In that capacity I had personal contact with hundreds of Holocaust-era insurance claimants in my State, other States, and from around the world. I have heard their stories, reviewed details of their claims, participated in the formal negotiations that led to the creation of ICHEIC, and have closely monitored ICHEIC up until the present time. Thank you first and foremost for your interest in this issue and for dealing with a topic that is both important and unfinished. I appreciate the opportunity to share the knowledge that I have developed over the last few years, and I'm especially happy to sit next to these survivors with me today in support of their efforts. I'm also mindful of the 63rd anniversary of Krystalnacht, which Congressman Waxman alluded to. It's profoundly relevant to our discussion here today, because history notes that in the aftermath of the violence, Jews in Germany lost their right to insure their lives and property and to receive insurance benefits owed to them. The issue of property insurance in Germany looms large today, and I will refer to it in just a moment. I'm here to communicate today a simple yet sobering assessment of the Holocaust insurance claims process. It is not working. After over 3 years of struggle, the International Commission has simply not taken care of the business it was set up to do. For the survivors in the public, what matters most is the bottom line. This is the bottom line. Over a 3 period and after over 75,000 claims submitted, only 500 and some-odd settlement offers have been made. The denial rate, as has been mentioned, approaches 98 percent. This is not what survivors expected in 1998 when ICHEIC was formed. At that time there were hopes on all sides this matter would finally be put to rest in dignity. As revelations grew in 1997 about the scope of unpaid insurance policies, and as the threats of class action lawsuits began to be felt by the companies, public officials began to take action. Washington State Insurance Commissioner Deborah Senn proposed a special working group under the National Association of Insurance Commissioners, and she chaired in 1997 and 1998 a series of public hearings across the country, in which survivors and heirs movingly told of their efforts to recover insurance proceeds from European companies. Legislation was adopted in several States requiring companies to divulge the names of Holocaust-era policyholders so that families could learn that a relative had insurance and that a claim might be pursued. The creation of ICHEIC was really the product of these lawsuits, hearings, and legislative efforts. The idea was to create a voluntary process to handle worldwide claims according to clear and consistent standards that took into account the special historical circumstances of the Holocaust. Claims would be determined using relaxed standards of proof, and there was a clear recognition that the names of policyholders located in the extensive records and archives of the European insurers would be published. That vision has not come to fruition, and here are just a few of the problems we see: First, the claims denial. As I noted, denied claims outnumber offers 19 to 1. Under ICHEIC rules, claims are decided directly by the companies themselves, which are responsible for interpreting and applying the relaxed standards without any oversight at present. From the outset, the ICHEIC process has been seriously compromised by a lack of accountability and independent oversight. After arduous negotiations, a complex set of rules and guidelines were adopted to govern the validity and value of claims. These have been applied by the companies inconsistently and arbitrarily, allowing the burden of proof to be shifted back to the claimants. Relaxed standards have become an insurmountable burden that survivors cannot meet. Rulings by the chairman to correct some of these problems have met with stiff resistance by the companies, and it is unclear when and if they will abide by the rules as interpreted by the chairman. In short, survivors are getting a sense that the process is increasingly stacked against them. That may be a reason why two thirds of those who have received offers have not decided to accept them or not. Another issue of claims in limbo. Literally thousands of claims have been submitted in good faith and are sitting with nowhere to go. A significant number of these have remained in limbo for well over a year, because the German insurers in particular have not agreed to join ICHEIC. And I believe that at the next panel that will be addressed in more full. Math and validations are a problem. Whole categories of claims, including the enormous unpaid property losses suffered in the tragic events of Krystalnacht, have not been accepted by ICHEIC and have been invalidated. For these people, ICHEIC is not an available option. Finally, a growing number of claimants are unable to get responses from ICHEIC about the status of their claims. Some call a right, as we have heard, pleading for answers. To them ICHEIC looks like a bewildering bureaucracy which assigns people a number and doesn't answer at all. Unlike Mr. Huntsmeyer, it is a very emotional issue for the claimants. Finally, for survivors, the ICHEIC process simply cannot be considered valid without the publication of comprehensive lists of policyholder names. And I want to explicitly link the issue of deadline with the publication of names. Let me focus the remainder of my time on this issue and why it is so vitally important. Persons making claims today, with very few exceptions, are not the original policyholders. They are primarily survivors who experienced the Holocaust as children and are the legal beneficiaries of policies purchased by their parents or other adult relatives before the war. They did not know details of their parents' finances. They did not inherit well-kept files and documentation. But they do have memories, as we have heard. It's not at all surprising that up to four out of five claims submitted to ICHEIC do not name a company. Most claimants simply do not know. But they have a high degree of certainty that coverage did exist and that their father and mother's name and other details lie today in the files of an insurer. They simply want to review lists submitted by the insurers to confirm the existence of the policy and to go forward. The companies have all along been resistant to the publication of names. This issue lies at the heart of contested State laws. It is the focus of H.R. 2693, the proposed Holocaust Victims Insurance Relief Act. It has been debated endlessly within ICHEIC. The primary bone of contention concerning the German insurers from joining ICHEIC is the requirement of publication of names. Rather than actively challenging company resistance to publication, ICHEIC has attempted to work around the companies and locate policyholder data in public archives in Europe. The names found on the ICHEIC Web site today are almost all the product of this costly research rather than from company sources. It is a welcomed public resource that has proven the value of publishing names, but the research remains unfinished. Many more archival sources remain untapped due to lack of funding. Archives, while valuable, are not the most effective sources of lists. For every name unearthed by the hired researchers of ICHEIC, there are likely 100 in company files which have not seen the light of day. I would like to add, if I may, a brief personal note which illustrates this issue. My grandfather, Hermann Motulsky, was a German Jewish merchant in a small town, who was imprisoned in a concentration camp but was able to leave Germany safely before the war started. But he lost everything. After the war, he applied to West Germany for compensation for property and other damages suffered due to persecution. On his application, he left blank a section dealing with unpaid or confiscated insurance, suggesting that he had no policies to claim. Earlier this year his name appeared on the ICHEIC Web site, indicating that a public record had been found of insurance policies he owned in Germany before the war. In fact, I learned he owned three insurance policies in 1938, which he was forced to cash in just weeks before he left the country. The proceeds went to pay exorbitant taxes applied by the Nazis to fleeing Jews, a form of stealing. Years later he did not seek compensation for these policies, no doubt because he thought they were officially cashed in and no longer valid. Our family records did not indicate any record of these policies. Now we know better, and we'll be pursuing what appears to be three valid insurance claims. The lists work. As we sit here today, we're just a few weeks away from the 2002 ICHEIC claims deadline. Unless the lists are released, the process will fall far short of dealing with the problem and then the problem won't go away. Let me conclude by saying survivors and the public are increasingly doubtful that some meaningful measure of justice will be achieved through ICHEIC. The hope they felt that an honest, fair, responsive and transparent system to handle Holocaust-era insurance claims can be achieved is quickly vanishing. They know time is running against them, and it appears they have few places to turn for help. They want to see justice in their lifetimes. They want to have options to pursue what they feel is right. When they see their own executive branch of our government pledged to defend German companies in the U.S. Courts against lawsuits seeking redress, they are frankly dumbfounded and angered. How, they ask, can legal peace be awarded to the Germans or any company when they have not delivered on their promises to settle insurance claims? Coming after so many decades and so late in their lives, it is a particularly cruel and difficult disappointment for them to feel again victimized and without a voice in the process. Mr. Shays. Thank you, Mr. Kadden. Mr. Kadden. Thank you. Mr. Shays. Before I recognize Mr. Waxman for 10 minutes, I'm not sure I will be here when the next panel comes up and given the introduction of two other witnesses, or at least one and a guest, I wanted to acknowledge the presence of a friend and a neighbor and someone who has been very helpful to me on these issues and other issues--Roman Kent, who is the chairman of the American Gathering of Holocaust Survivors and an ICHEIC member--and just point out that he was born in Lodz, Poland and during the war years from 1939 to 1945--this blows me away--he spent that time in the Lodz ghetto and in Auschwitz and Dachau and Flossenburg concentration camps, and he arrived in the United States in 1946 under the auspices of the children's quota of U.S. Government's displaced persons. He started a very successful international trading company in Atlanta and moved to New York in 1953, and has lived in Stamford for a number of years. I will say he has a tennis court, and we are neighbors, and he's never invited me to play tennis with him, and that's the only negative that I know about him. Thank you for that opportunity to introduce you. And, Roman, it's nice to have you here. Mr. Kent. Thank you. Mr. Shays. Now, Mr. Waxman, you have 10 minutes. Mr. Waxman. Thank you, Mr. Chairman. I appreciate the testimony that each of you has given. It's remarkable that after all these decades have passed that there seems to be no acknowledgment by the insurance companies to the claims, even when you have such clear information about the insurance. And not only are the insurance companies refusing to acknowledge it, the question in my mind is whether the ICHEIC process is working, because that process was set up to streamline the ability for people to receive compensation for insurance policies that they had. Do any of you feel that the ICHEIC policy has been helpful, or do you feel that it has been ineffective? Dr. Brauns. Mr. Brauns. ICHEIC has--first of all, they made a judgment on my insurance company I'd like to show you, written in dollars, that say that it's not a dollar insurance, they have to do it in Lats. But the main thing that bothers me, they interfered with the right of a person to sue the company. They have advised the Justice Department that stopped all the lawsuits for Generali--and I'm sure the German, too--the other insurance company, but this is the problem. Because when you can sue, you can bring all kinds of evidence. I will tell you something that surprised many people who have forgotten. In the Nuremberg trial it was brought out that the first minister of Hitler was the president of the German insurance company, and he cooperated with the Gestapo and gave the names of the people who had 50,000 or 20,000---- Mr. Shays. Just move the mic a little further away. Mr. Brauns. OK. Who had insurance and they were--he was reported to the Gestapo. The Gestapo went and killed the people and the German Government shared the money with the Gestapo. But this is on the official record of the Nuremberg trial. So we have forgotten what really happened. It was incredible, and many people who are historians have forgotten that or overlooked it, but this is--and I can provide you, I mean---- Mr. Waxman. I would like to get that information, so you can put it in the record. But I want to ask about ICHEIC of the other witnesses, because what I want to find out is what we can do now to---- Mr. Brauns. Please let them sue, let them---- Mr. Waxman. So you feel you should not be barred from your lawsuit? Mr. Brauns. Exactly. Mr. Waxman. OK. Mr. Arbeiter. Mr. Arbeiter. I don't think that ICHEIC is of any help at all. The only thing that I think they are good at is spending the money. We understand that out of the very few claims that have been settled with the help of ICHEIC, they spend about $30 million for those few settlements. I have personally called ICHEIC several times and I get the same response, the same answer. Mr. Waxman. I gather the problem with your claim is that you didn't know the insurance company name? Mr. Arbeiter. Yes. Mr. Waxman. So ICHEIC doesn't know to whom to send it, to which company to send your claim? Mr. Arbeiter. I don't know if they are doing anything. We didn't hear from the insurance companies. When we hear from the insurance companies, we will get back to you. I don't know whether they are doing anything on it or not, because I get every time the same answer. Mr. Waxman. Mr. Falk, do you want to add anything on the ICHEIC issue? Mr. Falk. It is very hard for me to judge. Perhaps it is to see to it that perhaps ICHEIC gets to the funds that was promised to them, the funding. Mr. Waxman. They are frustrated. I am sure that we will hear later that the companies are holding back. Mr. Falk. Well, I am talking about the funding that was coming to them and never got there. Mr. Waxman. Yes. Mr. Falk. And the funding--the members of ICHEIC should not be able to decide on an independent committee to be established and to pay out the fund at their discretion, meaning whoever presents whatever they have, that is the way to do it. That is the way to wind down, the way I see it. Mr. Waxman. Yeah. Mr. Falk. There is no other way that I can see it. It is very hard. Mr. Waxman. Let me ask Mr. Kadden questions. All of you, I appreciate what you had to say. Mr. Kadden, you have been representing other people as well as your own family situation. What suggestions do you have to us to improve this whole situation in the time that we have available to close these cases? Mr. Kadden. Unfortunately, I think we are in a very difficult position based on the whole structure of ICHEIC. And I don't want to be sanguine about it, there are those who argue with some force that the whole way ICHEIC was created, its charter, is very hard to overcome. More than one person has used the expression the fox guarding the hen house. The role of the companies in the government structure of ICHEIC is very troubling. That was certainly not the vision of a number of the State regulators when the first discussions occurred. But that is what was done. That is how it was formed. We can speak all day, as I have on other occasions, on other days, all day about this. From the point of view of where we are now, I believe there has to be some sort of creative public accountability. It may not be done through any formal legislative or legal structure, but there has to be some sort of openness. Mr. Waxman. On whose part? Mr. Kadden. Well, I think there are a number of parties in the public, including the public in the business world, in the Jewish community, in government, who might be willing to step forward and serve as an advisory board to getting ICHEIC's house in order, working closely with--Chairman Eagleburger has worked tirelessly to try to balance the different forces on the ICHEIC. As a private entity, I am not sure what kind of reach other than the voluntary advisory commission could have to address some of the issues. There are pure business issues involved here with management and accountability of finances and the claims process itself. Mr. Waxman. Management issues within ICHEIC or within the companies? Mr. Kadden. Now within ICHEIC. Coming most recently from the point of a State regulator, we always approached this as a regulatory issue. I think I was going to say my final thoughts were, we have 50 State insurance regulators in this country who are well equipped to handle companies. There are some serious legal issues involved. I am not going to address those today, I am not competent to do that. But I think there are a number of regulators who would like to see this logjam lifted, and will provide resources to do that within the different State laws regarding regulation. Now, I do believe, though, in all honesty, that this has to be done on--as ICHEIC was created--on a voluntary basis. The solution has to be reached on a voluntary basis. The public has to be informed. Your help is very important. This hearing is part of that process. Mr. Waxman. Thank you. I hope so. Some have suggested that claims for the types of insurance processed by ICHEIC may not be appropriate because victims of Nazi persecution were compensated by the German Government, that a lump sum payment was made to Israel. How do you respond to that assertion? Mr. Kadden. The fundamental issue here is a contractual agreement, relationship between families who purchased insurance and the companies or their successors. In the large scale of things, collective compensation has had a place. But insurance was probably the most widespread form of family asset that was systematically looted by the Nazis. Not everyone had Swiss bank accounts, but just about everybody had some kind of insurance, modest as it was, and it meant something to them, as we heard. That was the basis of the original agreement between the company and the families. That should be the basis of the solution. Families should benefit. The children of survivors who are with us today should personally benefit during their lifetimes and have the satisfaction to close the book. Other forms of creative compensation may be useful in other venues, but not in this. I think insurance is a very personal issue, and I don't think there is any way around that. Mr. Waxman. Do you think that the U.S. policy should continue to be to advocate dismissal of lawsuits against German and Austrian insurance companies regarding Holocaust-era insurance claims? Mr. Kadden. As I said, I think I can speak for survivors on this most comfortably. There is a reaction of being dumbfounded by putting literally the cart before the horse. Fix the problem with unpaid claims before you close out people's options to pursue justice in our American court system. Now, again, I can't address the complex legal issues, but I know from a moral point of view and from the point of view of survivors, it makes no sense whatsoever that their options are closed to them in the interests of economic policy and world trade. That may be an argument that some can have on governing levels, but for the survivors in the street, so to speak, there is no understanding whatsoever of this. We see people today who are really exceptions. They have had the courage to step forward and speak out, to allow themselves to continue to pursue these claims for 50 years. Most give up. Most haven't made it to this point. I think I speak for them when I say they don't understand how the policy of legal peace can be put before resolution of the choice, or at least a process that gives them a fair shake. Mr. Waxman. So it is your position that we not have the current deadline, and that the deadline should be tied to the publishing of the lists, and separately we not have any kind of efforts by the U.S. Government to stop lawsuits until we have got this whole system worked out? Mr. Kadden. Well, if the deadline is extended, I think the same argument can be used to apply to other actions which affect the claims process on behalf of individuals. And I think there would be strong support for tying kind of suspension of all of the doors closing until we see some movement on getting claims paid and think there is a relationship there that can be extended not just to the claims line, but also to allowing people to at least walk their way through our American justice system in order to get some sort of justice. Mr. Waxman. Thank you. Thank you, Mr. Chairman. Mr. Shays. I am going to recognize Ms. Ros-Lehtinen in just 1 second. I would like, Dr. Brauns, for you to hold up a document that is priceless. Mr. Brauns. It bothers me that ICHEIC has interpreted---- Mr. Shays. Hold on 1 second. We have one problem. We have someone that has to translate. Mr. Brauns. It is in English. Mr. Shays. No, the reporter. You just left the mic. I want you to go back to that mic, and I want you to hold those documents up for me to see, sitting down right over there. Bring both documents there. And I would like you to hold those documents up so Mr. Waxman and the rest can see that. I want you to describe to me what that document is. Mr. Brauns. Well, there are two documents. One is the Regal Union Insurance Co. And then I have a reinsurance from Assicurazioni Generali. And it is written here, $2000 and then in dollars--it is printed out in dollars, $2000, New York Bank, to be paid or something like that. So it is documented, and that is why we need a court. Mr. Shays. Compounding $2,000, it would become a noticeable amount of money. Mr. Brauns. It was interpreted that it is worth nothing. Mr. Shays. I understand probably more than the money, obviously more than the money is the principle of the thing. Mr. Brauns. The principle. It was a trust that many people, not just my father, my father was a very well-known physician. But there were other people that were not. My father was a pioneer in doing it. What the community was doing to provide for their children like anybody here is providing for their children, education somehow, some way, and in the proper circumstances that was the only circumstance we could provide, because money in the bank meant nothing. And the houses meant nothing for education, because the war was already--it was 1930. I was 6 years old. It is tragic, because I feel--the organization like ICHEIC, and I have nothing. I mean you cannot call them. They don't answer. Mr. Shays. We get the point very clearly. I will be leaving, and I just want to thank each one of the witnesses for their participation. I thought we had a problem with overseas banks and investment houses, and the stealing of money. We know that we have slave labor, but I have never really given the kind of focus on this issue. It just blows me away. At this time I recognize Ms. Ros-Lehtinen. Ms. Ros-Lehtinen. Thank you very much, Mr. Chairman. I appreciate the time, and I am also very surprised by the testimony here today. We thank each and every one of you for coming today and sharing your story. I would like to ask about the secrecy and the transparency of the ICHEIC meetings. Are ICHEIC meetings open to the public? Are ICHEIC meetings open to representatives of grass roots Holocaust survivor organizations? Does ICHEIC disseminate publicly the transcripts of its meetings? And how are survivors supposed to find out about ICHEIC proceedings? And anyone may answer. Mr. Kadden. Mr. Kadden. The answers to your questions are: No, no, no, and no. I had the opportunity to attend ICHEIC plenary meetings on an extraordinary basis through the permission of the chairman as a representative of one of the State regulators. There are formal members of the Commission who are State regulators, elected officials and appointed officials of State governments, and also the State Department is represented in an observer capacity. But, in terms of their interaction with the public, it is unfortunately a series of no answers. There are no records of the meetings available to the public. From time to time I am aware of groups asking for some sort of explanation, and these are generally not available as far as I have been told. There are groups that have asked to attend just as an observer status. I believe these have been unfortunately turned down. Ms. Ros-Lehtinen. They have been turned down. What reasons have they been given for being turned down? Mr. Kadden. I am not certain what the specific reasons were, except that the ICHEIC meetings are conducted on sensitive matters and that some of the members of the Commission would be uncomfortable with members of the public being there. Ms. Ros-Lehtinen. Would any other panelists care to answer that? Mr. Brauns. As far as I know, I could never get in touch, and I tried to see Eagleburger and Eizenstat and I couldn't get through to them. Ms. Ros-Lehtinen. They would not respond to your requests? Mr. Brauns. No. Ms. Ros-Lehtinen. Thank you. Are there any representatives of survivors or claimants who have a vote on ICHEIC? Is the claims conference what you would call a Holocaust survivor organization? Is it really fair to have a commission where the companies have half of the votes and the claimants have no votes? What would you say about a structure that would apply for any other subject matter? Mr. Kadden. Well, such a structure was the result of intense negotiations by a very small number of people trying to create a forum where the various parties could participate with some comfort level. There is indirect representatives of survivors on the ICHEIC through an appointed representative, as you will hear later, of the claims conference. Also the State of Israel has a very active role on the Commission and uses it vigorously at times to advocate for survivors and claimants. However, my own observations, being at the meetings, are that because ICHEIC operates on a strict consensus basis where one party can actually effectively block decisions being made, there are no votes. I have never seen a vote being counted at ICHEIC, in the Commission proceedings. Ms. Ros-Lehtinen. Have you ever seen a vote conducted? Mr. Kadden. I don't believe a counted vote is part of their procedures. And so there is a lot of talk and survivors' concerns are laid on the table from time to time and heard by the others and make it into the record of the meeting somehow. But this is not really reflected in any kind of formal vote. If so, they would be heavily outnumbered, as you suggest. Ms. Ros-Lehtinen. Let me followup with something that was brought up before. Do you believe that we should create an express right of action in U.S. Courts for Holocaust victims and heirs to recover those policies? Mr. Brauns. I tell from you experience, and I mentioned to Mr. Kadden before, we had a commissioner in California, you know his name, Quackenbush. And he was very strong in stopping the insurance companies doing business in California. As soon as they found out about it, there was a big turmoil and they even--my letter--not my letter it was decided--I mean an answer to my questions of course, and other people I know responded to it. I think the same companies like the German company now there does a lot of business in California. They have just went to the schools and offering for a few dollars insurance for the children, school insurance, and getting out and pushing out of the business the American companies. So they are very active. A little threat to them is very effective. A threat to them is very effective. But who will do the threat? I don't know. Ms. Ros-Lehtinen. Does anyone else care to comment? Mr. Arbeiter. I was looking for a document. In which year-- I believe it was in 1997, the Commonwealth of Massachusetts established a commission to handle claims, insurance claims from Holocaust survivors, and they got involved. But the State Department interfered with it and I think ordered that there should be no claims brought forward. You see, I am the president of the Association of Holocaust Survivors of Greater Boston. I have a very difficult time explaining to my fellow survivors that the U.S. Government is preventing their citizens from claiming something which belongs to us, which is legally taken away from us. Why the U.S. Government, the State Department is not allowing the States to do what we think would be the appropriate thing, to be able to say to the insurance companies: If you don't settle the claims, all of those that belong in the legal claims with Holocaust survivors, you will not be allowed to do business in these Commonwealths. And this was the proposal in Massachusetts, and I understand it is the same thing in other States, except that we understand the State Department came in and interfered and is blocking that effort. Ms. Ros-Lehtinen. Thank you. Madame chairman, if I can maybe just ask one more question as sort of a wrap-up of what we have been talking about. Would it be a good idea to try to strengthen ICHEIC for claimants who don't want to go to court, but also guarantee a viable right to go to court for claimants who want to have a real judge and a real jury consider their claims? Mr. Brauns. Can I answer it? The question is every American citizen in this great country of the United States has the right of protesting through court. A certain amount of Americans have been deprived of suing any pretense. How can the American--how can we sue Generali? It will interfere in commerce--can you explain it to me? Maybe I am not intelligent enough to understand it--in the commerce between the United States and Italy. This is the answer. Because when you put pressure, you will get an answer. It is beautiful that you take the people and you get the settlement, but it belongs to the people who paid the money. They saved the money. They paid premiums. My father, for example, gets a special dispensation of the government to pay in dollars. He wanted me to get an education. And this is a question of trust that has been broken. Not only by my father, there were thousands of other people. One asks, how do you provide for your son? Oh, I took Generali. That is why it was popular. It was not popular because they just advertized in the newspaper. It is word by word. And then for them to deny the list. In my family alone, I know they had insurance. I cannot prove it. When I am gone, and I am now in my late 70's, and they are free. They have won. They have won the battle. Thank you. Thank you very much, all of you, to listen, because this is the issue. I think that American courts most of the time are just. Sometimes some things happen, but basically it is just. And this is the big privilege of American citizens to sue and recover what is owed them. And why is it taken away from the people who paid the moneys in? If anything is fraudulent, the courts will find out. We have witnesses. We have things. But I have here original documents. They didn't read my documents. And made a judgment-- they made a judgment without looking at my documents. Ms. Ros-Lehtinen. Any others? Mr. Kadden. Representative Ros-Lehtinen, if you surveyed survivors individually, I believe that they would strongly favor what you are suggesting. In fact, some of the State laws that have been passed that mainly focus on the publications of names do have an extension of the statute of limitations for private actions. Those laws are somewhat up in the air at this point. But the principle is recognized by a number of State legislatures in this particular regard. And I believe they would support such a right as intrinsic. A lot of them may not take advantage of it, because that is not their cup of tea. They don't want to engage in contention that way, but the right to do it is very important. Plus there is a very savvy recognition that when there are active lawsuits, it is a form of pressure that gets a message across in a forum that individuals sometimes can't. Ms. Ros-Lehtinen. Of course. Well, I thank you very much for your testimony. Thank you, Ms. Chairwoman. Mrs. Morella [presiding]. Thank you, Ms. Ros-Lehtinen. I know that we have had you here a long time. I know Ms. Schakowsky would probably like to ask a question. Just picking up on what was already discussed--let me just simply ask you, Mr. Brauns, did Generali ever explain how they came up with that $5,000 figure? Mr. Brauns. They didn't. They decided, Assicurazioni Generali did. They said $2,000 50 years later would be worth $5,000, which is not true. You go to any bank you find--but they--the letter that I got, that Rabbi Cooper got, they didn't even communicate with me because he was the last one to see them, was written that the policy is worth nothing, because lots and lists don't exist any more. This is a pity, because read the policy. It is right here. I mean, written in numbers. And this is what upsets me, because it was easy. Maybe a clerk saw it there and decided to write, OK, we decide that it is worth nothing, but we will give you $5,000. The tragedy is another one. I lived in Italy. I went to school there. I met and I am very close friends with top people in Italy. And I found out that all the records are there. They are in Trieste. Nothing is lost. And the reason they don't even want the lawsuit is because they applied and have gotten from the Italian Government the privilege of handling all of the retirement funds or something like that, and they got it. If I would have applied the lawsuit at the time, they would have given anything to me just to get rid of me. But they didn't have to. Mrs. Morella. Thank you very much. I want to recognize Ms. Schakowsky if she has any questions to ask. Ms. Schakowsky. I can't hardly articulate my frustration after listening to you and having dealt with this for a couple of years now myself, and it is remarkable. Danny, you told me that Representative Holmes-Norton was saying essentially in light of the September 11 terrorist attacks, where frustration is already being expressed, criticizing that for the lack of speed to compensate the people who were killed, injured, etc., in that incident. Here we are talking about half a century later. And we still can't get any small modicum of retribution and are running into all of this continuing red tape. What I think we need to do is just to stop talking about this and figure out what the plan that needs to be implemented, what do we need to do regarding lawsuits? Is it a matter of ICHEIC oversight? What do we do about the publications of lists and in that context what does this Congress do? I think we need some help from those of you who have dealt with this issue personally and professionally now to give us very concrete guidance, at least your suggestions. I mean, we will do with it what we can. What are the next steps now? I don't think we need to accuse anybody of ill will, but I think we need finally to say this is it. You know, we have tried this. It hasn't worked. This is the better way to go. And so what I am really asking for is a blueprint, a set of concrete proposals that we can be considering. There were some suggestions. I heard what you said about the lawsuits. But maybe we could even just make a wish list of things that we can then proceed from. If any of you on the panel want to respond with concrete suggestions, then we would be happy to hear it. Mr. Brauns. You know, insurance companies base everything on money. If you write a letter--Congress write a letter that everything will be terminated. Any business in the States of the United States, if a list is not provided, you will have the list within a week. I can guarantee that. We had a similar thing in California. Suddenly they changed everything for a week or two until unfortunately our insurance commissioner had to leave, for a reason that is not for me to judge. But what I am saying, insurance companies appreciate money. I was in a meeting with Governor Davis one day, and there was the representative who had--you probably know who I am talking about. I don't know his name. He is the representative of the Jewish Agency for Davis. But anyhow he had a collection--I don't know how many apartment buildings. He wrote a letter to the German insurance company that he is canceling all of the insurance with them. Within 1 week the President flew down to California to talk to him and see how can we remedy that, and how can we do whatever. Insurance companies understand money and a threat. And if a threat--I do it in a threat, they laugh about it. If a threat comes from Congress, they will listen. Ms. Schakowsky. Along with that, we would have to extend the deadline, don't you agree? Mr. Brauns. Whatever. They would not be able to work here, to sell. Ms. Schakowsky. For claims to be made. Mr. Brauns. Forget about the claims. If you talk about the list, to get the list, you say if you don't provide the list in 2 months you will stop--revoke all of the licenses to work in the United States, you will have it within a week. There is no question about it, because that is their business. Am I correct? Mr. Arbeiter. Yes, of course you are. I believe that the list is of greater, utmost importance, because we don't even know who is on the list and who isn't. In any case, I cannot get an answer whether the name of my parents, my father is on that list or isn't. Ms. Schakowsky. How long have you been waiting for a response? Even though they said 90 days or a little longer, how long have you been waiting? Mr. Arbeiter. Since December of the year 2000. Ms. Schakowsky. So it is almost a full year? Mr. Arbeiter. A year, yeah. But I get the same answer every time. Just wait another 90 days? We don't know. I don't even know whether they stuck it to the insurance companies or they didn't. I just get the same answer. We didn't get an answer yet. We don't know. I don't know whether it wouldn't be better and more important that we deal directly with the insurance companies. And if we don't get the right answer, as U.S. citizens we should have the right to sue the insurance companies. And I fully agree with my friend here, that if we would tell the insurance companies you cannot keep the money which is illegally yours, there is--what I understand 2 million policies outstanding, and the money is not theirs. The policies were paid for by our parents, by our grandparents. Why should the insurance companies be allowed to keep that money? We were--our properties, our freedom, our lives were taken by the Nazis. And what is difficult, very difficult for me, and again for my fellow survivors, to understand is why the U.S. Government, instead of helping their citizens, which we all are citizens of the United States for the past 50 years, instead they prevent us from claiming that which belongs to us. We all think that this is a very great disservice to the U.S. citizens. And again, I say, if we put to the insurance company the same thing that was handled in the case of Swiss banks, you settle those claims. You look into this case and settle it to the best satisfaction possible or you don't do business in these Commonwealths. There is many States in the United States that they are willing to do that. But the U.S. Government is interfering with it, is not allowing the lawsuits to go forward. Ms. Schakowsky. Mr. Kadden. Mr. Kadden. Those of us on the advocacy side have constantly tried to figure out what practical solutions are available to us. It is a quandary. I will say again, the issue of lists is the linchpin. I believe many survivors will feel that the process has been mainly fair and successful if comprehensive lists are disgorged. Who can compel the European companies to do that other than a fit of conscience or processes within these countries which we are not really directly related to? The regulators, the State legislatures have in some States attempted to address this by putting forward--or legislatures have passed legislation. It is another conversation, I think, to kind of summarize what we may hear from Director Shapo later about where that is at. It has been a frustrating legal process. If Congress can help to clarify and strengthen if necessary, States' right to regulate on this specific matter, it would be an enormous help. The idea here is to disgorge the names, serve the public interest, and to show what companies are responsible for in this economy, in this society that operates in our country. Short of that, I think for Congress to take an interest in how ICHEIC is operating, to try to streamline the claims process, would go a long way toward making survivors feel that they are at least getting a fair shake. Ms. Schakowsky. Before my time totally expires, does everyone agree that this deadline that is rapidly approaching has got to be pushed back? Is there anyone who disagrees with that? Mr. Brauns. I want you to understand. I filed the lawsuit in California against Generali. Do you know what the government did with my lawsuit? They transferred it to New York. And in New York the judge said, well, we will interfere. I don't know who told them. Was it ICHEIC who was responsible for it or was it some other person? But it was transferred to New York. All of the suits that Generali had are now in New York. They are cold. Ms. Schakowsky. Mr. Kadden, I interrupted you with a remaining couple of seconds. Go ahead. Mr. Kadden. The deadline, as I said, is linked intrinsically to the lists. Fix the process before you close it. Give the tools to the public to take advantage of the process. There is a fear among some that publishing names will create a cascade of improper claims that will flood in and be impossible to handle. I don't share that concern. I think a claims process has to be a claims process. It has to be accountable, successful and has to work for people. Because of the special nature here, the only way we can do that is through lists. And for that reason alone, I think there is very strong support for extending the deadline. That is also contingent on ICHEIC fixing its process. And particularly I want to note, not just the personal experiences of people with silences and lack of responses, but the way that the claims are handled, the way that they are judged and decided yea or nay, or forced to be put on hold because there is no place to direct them because ICHEIC doesn't have that kind of spread, has to be addressed, the way the criteria are put into effect by the companies and interpreted. But without the list this whole thing is really an exercise in rejecting 95 percent of the claims of the people who have the gumption to come forward. There are many who don't because they are confused or they simply don't trust us. Mrs. Morella. Thank you, Ms. Schakowsky. I am now going to, Mr. Falk had a brief statement. Mr. Falk. I believe the names are important. But, the claims process is unfair because the companies control it. The ICHEIC appeal and having to give up your right to sue in the U.S. court is totally unacceptable. Just because they did it to close out the bank deal, they want to push it on the insurance people, the same kind of situation. We didn't have in this process at all the niceties that the banking committee had where they send in their accountant to look over the bank accounts. We didn't have anything like that. Who was judge and jury on this thing? Only the committee. What is the committee? ICHEIC. That is all. It is ridiculous, this whole process is ridiculous. Mrs. Morella. The information you have given us has been very valuable, and as you know, in our next panel we will have ICHEIC here, and you have fortified us with background to try to correct this historically inequitable situation. Final word? Mr. Brauns. Final word. The tragedy is that ICHEIC is funded by the insurance companies completely. Not 50 percent, not 80 percent, 100 percent. Now, they can do anything they want with ICHEIC. They are funded. Thank you. Mrs. Morella. Well, we will get to the root of that with the next panel, too. I just want to give the final word to Mr. Waxman. Mr. Waxman. Thank you very much. You have been a terrific panel. I think you have set the issue clearly before us. Each one of you is so much more sophisticated, and you are able to articulate your frustration and show how unjust the situation is in each of your cases, and I know there must be so many others who don't have the ability that you have to come forward. And so we are not only going to fight for you, but we are going to fight for them as well and try to figure out how to make this whole process work. I am looking forward to the next panel and hearing their testimony and seeing if we can make some progress in this whole area. Mrs. Morella. I also want to thank the panel. Mr. Brauns. We need you very much, and thank you. Mrs. Morella. Mr. Waxman has been terrific. Thank you, Dr. Brauns, thank you Mr. Arbeiter, thank you Mr. Kadden, and thank you Mr. Falk. Thank you very much. We are really going to try to remedy the historically long problem that we have faced that has been so unjust, inhumane. Thank you very much. The committee is going to recess now until 1:15, give you all a chance to move around a bit. [Whereupon, at 12:40 p.m., the committee was recessed, to reconvene at 1:15 p.m., this same day.] Mrs. Morella. I'm going to reconvene the Government Reform Committee on the status of insurance restitution for the Holocaust victims and their heirs. I want to thank you all for being so patient on this second panel, as we are all in congressional session. I think you heard all those bells and knew that we had two consecutive votes, and so I appreciate your being here, and in the interest of the policy of the Government Reform Committee and all its subcommittees, I will ask the panelists if they would stand and raise their right hands so I may swear you in. Secretary Eagleburger, that's terrible to give you so little space there, too. Mr. Eagleburger. That's OK. [Witnesses sworn.] Mrs. Morella. The record will indicate the affirmative response. So I'm really pleased to have the Honorable Lawrence Eagleburger, Ambassador J.D. Bindenagel, Peter Lefkin, Nathaniel Shapo, Gideon Taylor, and Roman Kent. Thank you very much. I'm going to have your entire testimony included in the record and you may certainly give a synopsis of it. We'd like to ask you if you could try to keep your comments to about 5 minutes so that we'll have an opportunity for questions. Again, I thank you for your patience. I thank you for being here for this very important hearing. So Secretary Eagleburger, I will start off with you then, sir, and again, I particularly want to thank you again for coming. I know you had an operation not too long ago and it was a real sacrifice to be here, but it's your sense of commitment. So you may proceed when you want. STATEMENTS OF LAWRENCE EAGLEBURGER, CHAIRMAN OF ICHEIC, FORMER U.S. SECRETARY OF STATE; AMBASSADOR J.D. BINDENAGEL, U.S. STATE DEPARTMENT SPECIAL ENVOY FOR HOLOCAUST ISSUES, U.S. TRUSTEE FOR THE GERMAN FOUNDATION, AND U.S. OBSERVER TO ICHEIC; PETER LEFKIN, SENIOR VICE PRESIDENT, GOVERNMENT AND INDUSTRY AFFAIRS, FIREMAN'S FUND INSURANCE CO., ALLIANZ GROUP; NATHANIEL SHAPO, CHAIRMAN OF THE INTERNATIONAL HOLOCAUST COMMISSION TASK FORCE OF THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS, NAIC REPRESENTATIVE TO ICHEIC; GIDEON TAYLOR, EXECUTIVE VICE PRESIDENT OF THE CONFERENCE ON MATERIAL CLAIMS AGAINST GERMANY, ACCOMPANIED BY ISRAEL SINGER, VICE PRESIDENT OF THE CLAIMS CONFERENCE, CHAIRMAN OF NEGOTIATING COMMITTEE; AND ROMAN KENT, CHAIRMAN OF THE AMERICAN GATHERING OF HOLOCAUST SURVIVORS AND ICHEIC MEMBERS Mr. Eagleburger. I thank you for the comments, Mrs. Chairman. When I was in the government, when I had to testify before Congress, I studiously avoided coming to a committee hearing and saying how much I appreciated being there. I did not think it was wise to lie to the committee before I ever even got to the testimony. So I will leave it at that. But I will try to be very brief and then we can go into questions later, obviously. I think in looking back on my own experience with the ICHEIC issues and ICHEIC--you need to understand ICHEIC had been created before they came to me and asked me to chair it. So I really was getting into something that was already in existence, but I think it's important for this committee to recognize that we started from whole cloth, we started from scratch. There was no experience like this about this kind of a subject, and therefore a great deal of the early times, at least for experimentation, and there is no question we made some mistakes, and I will talk about those in a minute. But please do try to understand this, that there was not some pattern out there that we could follow. It's taken too long and it's cost too much. I don't argue that. But again, another thing that needs to be remembered is that there were two fundamental, I think, weaknesses in this whole concept, and we have, I think, by and large, managed to work through them, but you need to understand that when this issue was first developed, when the Commission was first developed--how do I put this nicely? The companies that joined, joined because they knew that if they did not, there would be consequences for their business activities in the United States. So there was no question there was resentment on the part of the companies for the fact that they were brought to this commission the way they were. The second issue that has, I think, plagued us, and me particularly, is that the concept of the ICHEIC was that decisions would be made by consensus, and I have to tell you, particularly if you start by understanding that there were these differences between the parties in terms of their willingness to join and willingness to be involved with the State insurance regulators and the Jewish groups obviously, clearly in favor of the process, and the companies, shall we say, to put it mildly less than enthusiastic, that it was almost inevitable that if you had to make decisions by consensus it was going to take a very long time to get decisions on tough issues where there was a real difference between the parties so that for about the first year, I guess, I tried to live with consensus and did live with it. But at some point after a great deal of frustration, I finally decided and told the companies that we were going to have to make some decisions on the basis of the chairman's decisions, that I would try to make those decisions after having heard all of the parties and trying to think through what would be fair, but that we could go on no longer with this issue of trying to decide everything by consensus. Again, the companies particularly thought this was a terrible idea, but then they have thought most of my ideas were terrible, so it didn't surprise me much. But having said that, I do think it has moved things along a good bit faster, but at the same time it has also meant that when it comes to implementing those decisions, I can't be sure with what enthusiasm the companies will implement them. So, let me just give you a couple of examples of what I mean, because we've done a little checking on the policies that have been put forward in which the companies have tried to reply. Claimant lived in Hungary and died in July 1944. The evidence of a $1,500 policy with Ross included a receipt confirming a deposit of the policy at the savings bank, so forth and so on, on May 10, 1944, which included the policy number, premium receipts and the sum insured. The receipt of quarterly premium payments of $45.45 was for the period starting on March 16, 1944, and thus this insured person paid his premiums through July 1944 when he died. In denying the claim, Ross told the claimant that no evidence of a contractual relationship with the company could be found. Now, I have several others. I won't waste your time with them now, but thanks to some serious detective work on the part of some sincerely productive people in ICHEIC, we have discovered that there are a number of these cases, which doesn't surprise me. As a consequence, one of the things I have decided to do which also will not--the enthusiasm of the companies in this regard won't be great either, is that I'm going to put together what I would describe in more positive terms than I should, but perhaps as a policing team of some sort that can, on a basis of, if nothing else, dipping into files, can check to see how well the companies are doing in terms of keeping to the decisions that I've made and how policies should be valued, what kind of evidence is necessary to make--to pay the policy and so forth. So we're going to start that early next year, and I would suspect that we will find that there are any number of these cases where there is a disparity company to company on how they have determined the chairman's decisions. Some of that may be legitimate, but I suspect some of that is less than that. Now, let me just very briefly go on for just another minute or two. There's no other way for me to start this than this way. For the last 40 years of my professional life, I have felt very strongly when I was in the State Department and so forth that the U.S. Government, in the period of the Holocaust, had performed abysmally, that we ourselves deserved some substantial criticism for the way we had conducted ourselves. And I decided long ago that to the degree I was able to do anything to make up for that, I was going to try to do it. And I would think most people would say that--who have seen me in the State Department and so forth, would say that I have tried. And I viewed this ICHEIC request that I become chairman, I viewed this as maybe the last opportunity I'd have to do that sort of thing. So I took it. I must say, I learned, as after I took it that it was not the bed of roses that I might have thought it might be. In fact, it's been a monumental pain in the neck for the last 2 years. That's a diplomatic way of saying I didn't like it much, Mrs. Chairman. But having said that and with all of the things that can be said against ICHEIC and the way it's worked, I would say to you and to all of those who say it's been a failure, I'd say two things: First of all, you tell me since we have laid out somewhere around or made offers on somewhere around--not we, but the companies, somewhere around $20 million, paid out something like $12 million or whatever that is. That's $12 million more than was the case 2 years ago when ICHEIC first began, and I consider that success, not failure. And I cannot tell you the degree to which I find it frustrating that the very people that this process has been trying to accommodate, the very people that know that these are claims that ought to be paid, spend their time knocking us around the head all the time. That is not to say we don't deserve criticism. I'm not arguing that at all, but I will say this to you. First of all, what we have accomplished is a lot more than people will give us credit for. We have spent a lot of money, but the majority of that money spent has been spent to establish a means of getting to the world Jewish community the fact that this commission exists, and that here's how you go about making a claim, and it is as well moneys hard--very definitely spent to some degree, I think, more than probably, I think in retrospect, we should have spent, but spent on paying an organization in the United Kingdom to deal with handing the claims out to whatever company they ought to be the recipients, and something to everybody when they don't know which company it should be. And I need to say at probably the end of this set of comments that a thing that needs to be understood as well and something that the evidence over time is, I think, made clear is that the expectations at the beginning of this process as to how many claimants there would be and how much money would be paid and so forth were probably exaggerated. First of all, 25 percent of the--I'll call them claims sent to the ICHEIC don't relate to ICHEIC at all; 80 percent don't name the companies because the claimant probably doesn't know which company it should be sent to if any. So we're dealing with a situation, one, where you tell me trying to make this kind of a process work before where we were starting from scratch and with all the best will, in the world, were dealing in a structure which had two fundamental limitations. As I said, this question of resistance on the part of the companies and the issue of consensus, this doesn't even get me to the point of talking about the Foundation, which is purportedly what these hearings are about. I will only say to you we are in negotiations with the Foundation now. We have been for some time on all of the same critical questions that have concerned the Jewish community for--in dealing with ICHEIC as such--lists, audits, appeals, decisions of the chairman, how the claims will be paid and so forth. Those are all issues that we're trying to deal with the Foundation, and I must tell you, in my judgment, and I need to start by saying that the gentleman who is representing the Foundation in our negotiations, Ambassador Brautigam, is one of the finest, most serious diplomats and negotiators I have ever run into. So this is not criticism at all of him, but I will tell you, from starting below him and I know Ambassador Bindenagel is going to have a heart attack when I say this, but better he than me, that the Germans have been--some of them in high places--have been totally unprepared to be cooperative. There is an institution in the German Government called the BAV, which is in essence the--it's a regulator of what, the insurance companies? And the deputy there, he ought to be encouraged to be a little bit more careful about the things he says in letters. And I want to end by just quoting from one those letters, if I can find it, just to tell you--give us, again, a sense of what we're dealing with in Berlin, and it's not that he's representative of the total attitude of the German Government. He's certainly not. But he is in a position where he can and has slowed things down substantially. Let me just read you part of a letter that he wrote. Wait a second, I will find it here. ``I would like to point out that in connection to reflections made in their preliminary remarks on compensation for interest and loss due to inflation, Mr. Sunbar and Mrs. Saunbladoff''-- this is a paper they wrote which talked about valuing German policies. But anyway ``here a grave mistake becomes obvious. It was the Nazi regime that robbed the Holocaust victims of all their property and assets, including their life insurance contracts. The Nazi regime was the culprit, and also the only one gaining by this crime, not the insurers. They did not benefit from it. They do not bear the responsibility for it. After the liberation of Germany from the Nazi regime, it was the German Federal Republic, which as an adequate response, took over the responsibility for compensation and restitution so---- Mrs. Morella. Secretary Eagleburger, may we include that the record? Mr. Eagleburger. You certainly may, since it's public. Mrs. Morella. Thank you. Mr. Eagleburger. But my point here is the mindset that this demonstrates, and please don't misunderstand me. I am not saying that across the board, the problem is within the German Government or anything of the sort, but I am saying there is enough resentment, there is enough antagonism to this process that I cannot tell you with absolute certainty that we will succeed in the negotiations with the German Foundation. There are a series of issues, some of which--well, you know them all. As I said, lists and so forth. Some of them we can probably--well, almost certainly succeed and Ambassador Bindenagel will tell you, in fact, he's totally confident we can succeed, but that's because he doesn't have to do the negotiating. But if this kind of an attitude of this gentleman sits astride one of the bureaucratic institutions that can block this whole thing, and with this kind of attitude, I have to tell you we'll never get an agreement on audits, which are absolutely critical to the Jewish community. I have wandered on too long and I will stop. I will only say to you one more time, by no means have we been perfect, but I would suggest to you all that we have been substantially better than I gather was the characterization this morning, and some of it from some of the testimony I heard, some of these people were just confused about some things. For example, someone who contended that ICHEIC sent a letter refusing to pay a policy is incorrect, because ICHEIC doesn't send those letters. The insurance company did I'm sure. But not ICHEIC. We don't get into that business. But again, to close, there is a lot yet to be done. There's a lot yet to be cleaned up. And let me answer the question before you ask it. Assuming we succeed in getting more names, the lists, I see no possibility personally that ICHEIC could terminate its existence without first accommodating and extending its existence to give fair time for those new potential claimants to make their claims. Now it's not a decision for me to take alone. I have to discuss it with the whole ICHEIC, and there will be some disagreements, I'm sure, but I think I can say to you all fairly confidently that we will extend if we get agreement, and we will extend a fair amount of time so that people can have that chance to make their claims. I cannot tell you we're going to get an agreement, and until that is settled, I'm less than confident of what we will do. I want to end by saying there are two companies that--I have been less harsh on the companies in general than I would be if I weren't in a good mood, but there are two that I want to highlight as having been cooperative, and they deserve, in my judgment, some praise for that. The first is Generali who is a target of many, I know, but who, after a while, being very difficult finally realized that if they were ever going to get out from under this business, which I wish the other companies had recognized early on, they recognized that the only way to get this settled was to settle it. And so we--the Jewish groups Generali and ICHEIC made an agreement with them and things have been moving along. They have paid a substantial amount of money. There are a number of cases where I'm not happy with some of their rejections, but we'll go back and look at those. The other place I would like to be complimentary is that the Dutch Insurance Federation, which joined ICHEIC rather than a single Dutch company, has also been very cooperative and very supportive, and in fact, without them, we would have run out of money a long time ago. And during the question and answer period, I'd be happy to talk some more about the fact that the companies, all of the companies, MOU companies, seem to have lost the key to their bank balances. And I have had a terrible time with them for the last 6 months trying to get more money out of them to continue this process, and so far without success, but here's the last point I want to make, which is, please understand that if we extend the life of ICHEIC, it's going to cost more money, and as of this stage, I can't tell you with any confidence that I can squeeze that money out of the company. Thank you, Chairman. Mrs. Morella. Secretary Eagleburger, you have been very candid in your comments and have anticipated a few of the questions we'll be posing to you. I am now pleased to recognize Ambassador Bindenagel. Mr. Bindenagel. Thank you, Madame Chairman and Representative Waxman and members of the committee. I will say that as a member of the State Department, I do believe what I'm about to say, despite what the good former Secretary had to say, I appreciate the opportunity to appear before you today to discuss policy concerning---- Mr. Eagleburger. Only in the State Department are they that wimpy. Mr. Bindenagel. We live up to our reputation. We're dealing here with unpaid Holocaust insurance claims, ICHEIC, and as they are included in the bilateral agreements with Germany and Austria. Of course, the U.S. Government recognizes the importance that unpaid insurance policies issued in Europe during the Holocaust era are honored, and honored expeditiously. At the outset, I'd like to say that given the commentary this morning, we have not waived the rights of American citizens to sue. Rather, we have sought to create a new and effective remedy for those who wish not to sue. In the spring of 1998, the U.S. State Insurance Commissioners and the Holocaust Survivor Organizations invited the U.S. Government to support an international commission to resolve unpaid Holocaust-era claims and asked us to use diplomatic efforts to bring the affected European governments and companies into the process. We agreed to support this effort and to become an ICHEIC observer although not a member. The initiators of this effort were Neil Levin, at that time the supervisory authority in the State of New York, and the vice chairman of the National Association of Insurance Commissioners and North Dakota Commissioner Glen Pomeroy. They met with Holocaust survivors as you did this morning, who also told their stories of purchasing insurance policies as part of their dreams of future, of deaths to family members, of their own survival, and of their unsuccessful attempts to receive just compensation under those policies. Mr. Levin once described a theme of the effort to establish ICHEIC as ``voluntary action based on a moral foundation.'' Although Neil Levin died in the September 11 attack on the World Trade Center, his respect for human dignity through this historic effort continues to inspire us to finish his work. Our support for his vision to resolve these issues amicably and cooperatively is one in which we remain firmly committed. The policy of the U.S. Government with regard to claims for restitution or compensation by Holocaust survivors and other victims of the Nazi era is motivated by the twin concerns of justice and urgency. And as Mr. Shays stated on behalf of Mr. Burton this morning, our support too for ICHEIC is based on U.S. interest in obtaining a measure of justice for victims, including many U.S. citizens who are Holocaust survivors and also to enhance our political and economic relations with European friends and allies as well as with the state of Israel. We've done several things to support ICHEIC. In August 1998, after the MOU was signed and the International Commission was begun, the State Department organized a seminar in Prague to help spur international cooperative efforts to translate these international communities interest in research and historical acts into action. The U.S. Government publicly supported this new International Commission in 1998 at a meeting of the National Association of Insurance Commissioners in New York City. The State Department organized that the Washington conference in Holocaust-era assets held in November and December 1998, the proceedings of which were published and are here for the committee, if they would like. The participants urged the resolution of insurance issues, but they also noted historically important German Governments efforts to compensate the victims of Nazi persecution with payments amounting to some 100 billion marks. These were talked about in this morning's panel several times in reference to the so-called BEG, or the German Federal compensation programs. These compensation programs also included some compensation for some confiscated insurance policies. The U.S. Government has actively encouraged other governments to seek observer status in ICHEIC and as a result the governments of Belgium, the Czech Republic, France, Germany, Italy, and Poland became ICHEIC observers and joined this international effort. The U.S. Government strongly encouraged all insurance companies that issued policies during the Holocaust era to join ICHEIC and participate fully in this program. We worked with representatives of the Dutch Government, insurance industry, and survivor organizations to incorporate the Dutch companies, as Mr. Eagleburger said, into ICHEIC. And through these agreements that we made with Austria and Germany, the United States brought the entire German and Austrian insurance industries into the process through international agreements. This came about because in the fall of 1998 the German Government and German industry turned to us, the Federal Government, for help in facilitating the resolution of class action lawsuits brought against German companies. Germany proposed the creation of a foundation to make dignified payments to force laborers, to resolve property and insurance issues, and we agreed to work with them. After 18 months of a very difficult negotiation on July 17 last year, the United States and the Federal Republic of Germany signed an executive agreement which committed Germany to operate a foundation under the principles to which the parties in the negotiations had agreed, and at the same time, committed the United States to take certain steps to assist German companies in achieving legal peace in the United States. Victims' interests were broadly and vigorously represented throughout the negotiations, and in the end, all the parties accepted the Foundation ``Remembrance, Responsibility and the Future'' as a worthy result. The U.S. Government has filed interest--statements of interest recommending dismissal on any valid legal ground in court cases brought against German companies for wrongs committed during the Nazi era and its commitment to do so in future cases that would be covered by the Foundation agreement. However, as I said at the outset, the United States has not extinguished the claims of its nationals or of anyone else. This Foundation which was created as a result of our negotiations was capitalized at 10 billion marks with the German Government providing 5 billion marks, and the German industry providing another 5 billion marks, plus 100 million marks in interest. A board of trustees oversees the Foundation's operations which are managed by a three-member board of directors. The 26 members on the board of trustees include representatives of the German Government, the U.S. Government, the State of Israel, German companies, but also victims' organizations and plaintiffs' attorneys. The Foundation is subject to legal oversight by the German Government and is audited by two agencies of the German Government. If you look at the U.S./German executive agreement of July 17, 2000, you'll find that it provides a framework for the treatment of claims made against German insurance companies but with the details of implementation left to the responsible parties. I'd like to emphasize that the executive agreement provides that insurance claims that come within the scope of the claims handling process of ICHEIC adopted as of July 17, 2000, and are made against German insurance companies, shall be processed by the companies and the German Insurance Association on the basis of procedures and on the basis of such procedure, agreed procedures, and on the basis of any additional claims handling procedures that may be agreed among the Foundation, ICHEIC, and the German Association. It is that portion of the agreement that we're now talking about. The additional claims handling procedures are under negotiation by the parties and the parties have--and the government--I must say, are the Government of the United States and the Federal Republic of Germany are not part of those negotiations. We do not advocate positions of any one side, but have rather taken a position to facilitate and encourage all sides to come together to resolve---- Mrs. Morella. Ambassador Bindenagel, I'm going to ask you if you could try to wrap up. Mr. Bindenagel. Yes. Mrs. Morella. Thank you. Mr. Bindenagel. I will be delighted to do that. Let me just turn to a closing remark, if I may. These negotiations need to be brought to conclusion, and given the advanced age of Holocaust survivors and the need for them to receive a measure of justice in their lifetimes, the U.S. Government is concerned that the provisions for insurance under the German Foundation are not yet operational. It is distressing that more than a year after the law creating the German Foundation took effect, and some 5 months after the Bundestag declared adequate legal certainty had been achieved for German companies operating in the United States, thus allowing payments to force the slave laborers, the insurance negotiations on additional procedures, have not been completed. We would like to call on the German Foundation, the German Insurance Association, and all the parties of ICHEIC, those represented here, the insurance companies, the representatives of the Jewish organizations, and the U.S. and State insurance regulators, to come together in the spirit of cooperation that was envisioned by the initiators of this worthwhile effort, and reach agreement now on these outstanding issues. Holocaust survivors and their families deserve at least some measure of justice that's been too long denied, and only by bringing the aspects of this Remembrance, Responsibility and the Future Foundation into full operation, can this be achieved. Madame Chairman, thank you very much. Mrs. Morella. Thank you, Ambassador Bindenagel. [The prepared statement of Mr. Bindenagel follows:] [GRAPHIC] [TIFF OMITTED] T7710.025 [GRAPHIC] [TIFF OMITTED] T7710.026 [GRAPHIC] [TIFF OMITTED] T7710.027 [GRAPHIC] [TIFF OMITTED] T7710.028 [GRAPHIC] [TIFF OMITTED] T7710.029 [GRAPHIC] [TIFF OMITTED] T7710.030 [GRAPHIC] [TIFF OMITTED] T7710.031 [GRAPHIC] [TIFF OMITTED] T7710.032 [GRAPHIC] [TIFF OMITTED] T7710.033 [GRAPHIC] [TIFF OMITTED] T7710.034 [GRAPHIC] [TIFF OMITTED] T7710.035 [GRAPHIC] [TIFF OMITTED] T7710.036 [GRAPHIC] [TIFF OMITTED] T7710.037 Mrs. Morella. Mr. Shapo. Mr. Shapo. Good afternoon, Madame Chair. I'd like to thank you, Representative Waxman, and your committee for your interest in this very important matter. I'd be remiss if I didn't also say hello to my Congresswoman Representative Schakowsky. She and I are both from Evanston, IL which is right next door to Skokie, a community with one of the highest per capita concentrations of Holocaust survivors in the United States. She's a tireless advocate for these constituents, and I'm lucky to work with her to that end. I'd also like to reiterate comments by others about my friend, Neil Levin, who died in the World Trade Center while displaying the same commitment to public service, that was also at the heart of his work in establishing ICHEIC while he was the New York superintendent of insurance. Time is short in this hearing, and I have previously submitted lengthy written testimony. I'll briefly describe the involvement of the National Association of Insurance Commissioners in these proceedings and also give my views on the ongoing German Foundation negotiations. I have a fundamental interest in this matter, the fulfillment of the insurer's obligation to its consumers who entered into a contract, paid premiums and expected themselves or their beneficiaries to receive the benefit in the case of an insured event. What we are talking about today is not really reparations, as I understand it, but rather the long, overdue, simple fulfillment of a contract which is, of course, a core regulatory goal. State insurance commissioners thus take great interest in this matter, particularly because many consumers who had Holocaust-era policies now live in the United States, and many of the insurance companies have American subsidiaries or corporate relatives. State regulators were leaders in the effort to identify and insure payment of Holocaust-era policies. NAIC formed a Holocaust working group and held extensive hearings throughout the country in 1997 and 1998. Following these hearings, State regulators helped persuade several European insurers to sign the memorandum of understanding that formed the International Commission on Holocaust Era Insurance Claims in August 1998. Five insurance commissioners are currently ICHEIC participants: California Commissioner Harry Low, Florida Commissioner Tom Gallagher, New York Superintendent Greg Serio, Pennsylvania Commissioner Diane Koken, and for the last year, myself. I chair the NAIC's Holocaust task force, and I represent the regulators in ICHEIC's negotiations with the German Foundation. I'd like to go right ahead and talk about the German Foundation initiative, which contains at least 550 million Deutsche marks for insurance purposes, 200 million for claims, and 350 million for humanitarian aid. The U.S./German executive agreement calls for the Foundation to come to an agreement with ICHEIC on the disbursement of funds in accordance with ICHEIC standards. The Foundation agreement covers the whole German market, including those companies who are not members of ICHEIC to the payment of claims and humanitarian aid. The Foundation negotiations have dominated ICHEIC activities during the last year and a half, diverting attention and resources from the Commission's basic task of implementing the MOU. This has delayed many important aspects of ICHEIC business, including the development of a mechanism to process the so called 8a1 claims, which refers to the specific humanitarian Section of the MOU that calls for relief for those with claims that either cannot be attributed to a particular insurance company, or are attributed to a particular company no longer in existence. Since over 80 percent of ICHEIC claims do not name a specific company, I pushed repeatedly for the adoption an 8a1 process, but the difficulties posed by the German Foundation negotiations have been the main roadblock to substantial progress on this matter. Major points of the Foundation negotiation are the publication of lists, audits of company records and processes, appeals of adverse decisions and reimbursement of company costs from foundation funds. The executive agreement was signed 16 months ago, July 17, 2000. In my opinion, ICHEIC should have an agreement with the Foundation by now. Funds should already be flowing to aging claimants. Survivors like the heroic Erna Ganz, who Representative Schakowsky mentioned earlier, have died in the meantime. While ICHEIC is probably not blameless in these lengthy yet unsuccessful negotiations, I believe that the German companies, both the original ICHEIC companies and those now brought into the process by the Foundation, have been primarily responsible for the delay. The affected companies have a heavy and affirmative burden to meet basic ICHEIC standards, because these processes bring legitimacy to our endeavor. The executive agreement specifically calls for the Foundation's cooperation with ICHEIC, and upon its signing, Secretary Eizenstat stressed that ``it is critically important that all German insurance companies cooperate with the process established by ICHEIC. This includes publishing lists of unpaid insurance policies and subjecting themselves to audit. Unless German insurance companies make these lists available through ICHEIC, potential claimants cannot know their eligibility, and the insurance companies will have failed to assume their moral responsibility.'' I will not comment on the details of the negotiations over lists, audits, and appeals as they were ongoing. I will, however, stress the basic characteristics of ICHEIC methods must be incorporated into any agreement with the Foundation. Public confidence in our work rests on the integrity of these processes. Although progress on these issues has been slow and disappointing, recent negotiations have been more productive, as Dr. Hans Otto Brautigam has taken over for the Foundation. As Chairman Eagleburger mentioned, Dr. Brautigam is a straightforward and experienced diplomat. His professional manner is reflected in his substantive approach to disputed issues. He has put forth proposals on lists, audits, and appeals that while not yet agreeable to ICHEIC, serve as the basis for reasonable negotiations. We can resolve these claims-related issues in the next several weeks if the companies make the necessary final basic concessions in the interest of justice and fair play. Unfortunately, we are much further away from a common understanding on costs and company reimbursements. No final agreement between ICHEIC and the Foundation can be reached until the Foundation drops its plan to reimburse tens of millions of dollars out of foundation funds to ICHEIC companies for their previous payments to ICHEIC. The NAIC has unanimously adopted a resolution, which I authored, objecting to the size and scope of these diversions of foundation assets. I'll provide a copy of this resolution for the record should it please the Chair. Mrs. Morella. Without objection, so ordered. Mr. Shapo. The Foundation proposal presented in June calls for a total of $76 million in payments and expenses to be covered out of Foundation insurance funds, $51 million from the claims money and $25 million from humanitarian. These reimbursements would swallow up over half the 200 million Deutsche mark claims fund. Furthermore, $36 million of these reimbursements are retroactive payments to the original ICHEIC companies for their past ICHEIC assessments. The largest recipient of retroactive relief would be the German insurer Allianz, the corporate parent of Fireman's Fund, which stands to gain well over $10 million from this plan. The companies argue that these payments are required, every dollar and Deutsche mark, by the German law that sets up the Foundation. I disagree. I believe that while there is a legal basis for a much more modest prospective cost plan, the Foundation's current proposal is unacceptable legally, politically, and morally. My written testimony details at length how the company's plan is contrary to the U.S. German executive agreement and a reasonable interpretation of the German law. In the interest of time I will not recite these details, but will rather simply state that the NAIC will never stand for a $76 million diversion of funds from survivors and claimants to insurance companies which would violate the letter and spirit of the controlling laws. It would also be a moral affront to every Holocaust survivor. I'd like to conclude by saying that I welcome your interest in these issues. Congress has a legitimate and necessary oversight role to prod all of us involved in seeking justice in Holocaust matters to keep the interest of survivors front and center in our work. The German people and the post war German Governments have repeatedly shown a genuine commitment to make amends for the horrific crimes committed by that country during the National Socialist era. Well over $50 billion in restitution has been paid over the years. The current foundation effort, whereby German industry for the first time acknowledges and offers recompense for its untoward gains during the Holocaust, is a necessary step in providing a modicum of justice for those who survive and for honoring the memories of those who perished. It is my high personal priority to make sure that State insurance commissioners are doing everything reasonably within our power to aid this process. I, therefore, thank you, Madame Chair, for the opportunity to share my views with you today. Mrs. Morella. Thank you, Mr. Shapo. [The prepared statement of Mr. Shapo follows:] [GRAPHIC] [TIFF OMITTED] T7710.038 [GRAPHIC] [TIFF OMITTED] T7710.039 [GRAPHIC] [TIFF OMITTED] T7710.040 [GRAPHIC] [TIFF OMITTED] T7710.041 [GRAPHIC] [TIFF OMITTED] T7710.042 [GRAPHIC] [TIFF OMITTED] T7710.043 [GRAPHIC] [TIFF OMITTED] T7710.044 [GRAPHIC] [TIFF OMITTED] T7710.045 [GRAPHIC] [TIFF OMITTED] T7710.046 [GRAPHIC] [TIFF OMITTED] T7710.047 [GRAPHIC] [TIFF OMITTED] T7710.048 [GRAPHIC] [TIFF OMITTED] T7710.049 [GRAPHIC] [TIFF OMITTED] T7710.050 [GRAPHIC] [TIFF OMITTED] T7710.051 Mrs. Morella. Mr. Taylor, we've been generous with the time. I'm going have you kind of look at our color coding here; otherwise we'll be here all evening. Mr. Taylor. Thank you, Madame Chairwoman. We appreciate the fact that the committee is holding this hearing, and I would also like to acknowledge the tremendous role of Chairman Eagleburger in addressing these issues. In addition, the constituents and---- Mrs. Morella. Would you press your mic. Mr. Taylor. I would also like to acknowledge Ambassador Bindenagel and his staff for their most important work in the field of Holocaust-era insurance and other forms of restitution. The statement is made on behalf of myself, Gideon Taylor, and Israel Singer, vice president of the Claims Conference and chairman of the negotiating committee. To quote Elie Wiesel at the opening of the Washington Conference on Holocaust Assets in November 1998, he said as follows: ``Thus it is really a matter not of money but of moral demand and of commitment to conscience and memory. Memory is our shield, memory is our fortune, our only fortune; so let us remember not only the big fortunes, palaces and our treasures, let us remember also the less wealthy families, the small merchants, the cobblers, the peddlers, the school teachers, the water carriers, the beggars. The enemy robbed them of their poverty.'' The Claims Conference was one of the negotiating partners in the establishment of the German Foundation and was the primary negotiating partner with German insurance and negotiated the funds to be allocated to the insurance component of the German Foundation. The Claims Conference is one of the member organizations of ICHEIC together with the State of Israel, the World Jewish Restitution Organization, the insurance companies who are signatories to the MOU, and the National Association of Insurance Commissioners in the United States. The issue of the administrative procedures of ICHEIC has been raised by a number of individuals. It has been the experience with the Swiss banks and other programs, the cost of carrying out outreach to find claimants, operating call centers and handling applications is expensive. We and other members of ICHEIC are working with the staff of ICHEIC in an effort to reduce these expenses to the greatest extent possible. Regarding the claims process in our view, it is the responsibility of ICHEIC to the claimants to ensure that every appropriate step is taken to inform potential claimants of the process by undertaking outreach, to inform potential claimants of the existence of unpaid policies through the publication of lists, to require to companies to assume responsibility for their policies, including nationalized policies and confiscated policies and policies that were issued by their branches and subsidiaries, to process those policies in a transparent manner that recognizes the suffering and destruction of the Holocaust in the passage of time and to ensure that the costs of the claims process are borne appropriately. While some progress has been made, we must unfortunately conclude that we have not yet achieved the success we would have desired. Prior to the signing of the German Foundation agreement, we hoped that the process would work as smoothly. Deputy Secretary Eizenstat, as we noted, said it is critically important that all German insurance companies established by the International Commission on Holocaust Era Insurance, and in his speech to the Claims Conference Board of Directors on July 18 this year, Deputy Secretary Richard Armitage, on behalf of the new administration, reaffirmed the importance of dealing with these critical issues. After over 15 months of negotiations with German industry and then the German foundations, the current state of affairs is not at the moment encouraging. The German insurance companies are yet to agree in principle to implement some of the ICHEIC standards, and in cases where companies have agreed in principle, we are not yet confident that the interpretation of these standards always meets the spirit that lies behind them. Regarding claims processing, firstly, it was our clear understanding that the claims processing by Germany would comply with the standards and burdens of proof, evaluation, and decisions of the chairman of ICHEIC, cases have been highlighted to this committee, which illustrate the problematic manner in which some of these cases have been handled. We believe that in order for the claims processing to be successful, a systematic monitoring of offers and rejections is most important. In addition, we believe that a system of valuation of insurance claims to bring the value of policies to today's value is critical. We await confirmation by the companies, the decision of the chairman of ICHEIC in this regard will be implemented. Regarding lists, there is not yet an agreement on the question of a comprehensive publication of lists of policyholders' unpaid policies. We believe that the process to identify such policies must be one that will be as flexible as possible to enable the lists to be complete. Regarding audits, an audit of the claims process is, in our view, most important to enable claimants to have confidence in the process. And Mr. Shapo has addressed very clearly the issue of the costs in his remarks. We too are disappointed with the proposal made by the German Foundation. Concerning Austrian insurance policies, the agreement in January 2001, provides for $25 million of the Austrian agreement to cover insurance policies not covered by the German Foundation and ICHEIC. It was the intention that the sum of $25 million to be provided by the Austrian Government and industry would pay for policies issued by Phoenix, Der Anker, and other companies. It's our understanding after some discussion that the Austrian companies that issued the policies will assume full responsibility for the period irrespective of the ownership of the company and/or its assets during the Nazi period. In conclusion, we believe that it should not go unrecorded that the German Foundation has had some major achievements. As the partner organization responsible for making payments from the funds of the German Foundation to most Jewish former slave and forced laborers, we are pleased to report that the Claims Conference has already distributed some 434 million Deutsche marks equal to $202 million to 43,423 Holocaust survivors in 47 countries. The German Foundation has succeeded in bringing together the parties and in implementing a speedy and effective way to make payments to former slave and forced laborers. We hope and believe that this success can be replicated in the area of Holocaust-era insurance. With some showing of flexibility, this can be achieved. We must resolve these outstanding matters immediately. As Deputy Secretary Eizenstat stated last July, we all now bear a heavy responsibility to implement this historic agreements. The victims have waited 55 years for this day. We cannot let them wait longer. Thank you. Mrs. Morella. Thank you very much, Mr. Taylor. [The prepared statement of Mr. Taylor follows:] [GRAPHIC] [TIFF OMITTED] T7710.052 [GRAPHIC] [TIFF OMITTED] T7710.053 [GRAPHIC] [TIFF OMITTED] T7710.054 [GRAPHIC] [TIFF OMITTED] T7710.055 [GRAPHIC] [TIFF OMITTED] T7710.056 [GRAPHIC] [TIFF OMITTED] T7710.057 Mrs. Morella. I'm pleased now to recognize Mr. Lefkin. Mr. Lefkin. I thank you Congresswoman Morella, and thank you Congresswoman Schakowsky. My name is Peter Lefkin, and I serve as senior vice president for Government and Industry Affairs for the Fireman's Fund Insurance Companies. Our company, which is headquartered in Marin County, CA, about 20 miles north of the Golden Gate Bridge, has been in business for about 135 years. Since 1991, it has been owned by Allianz AG, a major financial services company headquartered in Munich, Germany. I am here today in response to a letter of invitation from the committee. I have to state at the outset that my own expertise is somewhat limited, since the German and American executive agreement and the German Foundation law were concluded about a year ago. In addition, Allianz also has had nothing to do with the Austrian agreement. Therefore, I may have to refer some of your questions back to my colleagues in Germany for more detailed responses. I'd like to say at the outset it's a particular honor for me to be on the same panel with Secretary Eagleburger, who chairs the International Commission. He has made a significant contribution in this and so many other areas of our public life, and he has assured that his work has resulted in the fairly and timely resolution of a significant number of unclaimed insurance policies. The ICHEIC has established relaxed standards of proof for the processing of claims. This acknowledges the passage of time and the practical difficulties that people confront in locating relevant documents. The ICHEIC has also performed valuable work on the difficult issue of policies which may have remained unpaid as a result of communist nationalization in Eastern Europe. Now, before I comment on the creation of ICHEIC and Allianz's role, I should comment on the history of the German restitution process. After the war and with the encouragement of the Allied governments, the Federal Republic of Germany established a comprehensive restitution program, and this program included insurance policies. More than 100 billion Deutsche marks has been paid in compensation to the victims ask of Nazi persecution. In today's value, this is far in excess of over $100 billion. These payments took into account all elements of properties that were seized by the Nazis, including insurance. As a result of restitution, the number of unclaimed insurance policy Holocaust victims that arise from Germany is relatively small, and, in fact, it is my understanding that in the German Foundation negotiation, that ICHEIC stated the total amount to be less than $30 million. In the opinion of the German Insurance Association, this appears to be somewhat high, but nonetheless this is a benchmark that they established. In 1997, Allianz on its own established a 24-hour help line to field inquiries throughout the world in which individuals could attempt to ascertain whether or not they or one of their relatives had a policy which may have gone uncollected. Allianz has really always sought to be open and transparent. Beginning in 1997, public hearings were conducted throughout the United States by the National Association of Insurance Commissioners. Allianz testified in most of those proceedings. They also appeared before the House Banking Committee in 1998, and we learned a lot from these hearings. First thing we learned was that the history of insurance during the Holocaust era was indeed complex. Laws, as a practice, varied among the nations of Europe. In Germany, for example, the majority of policies held by the German Jewish population were surrendered before World War II began. During the war many more were confiscated by the Nazi regime and only a small amount went unpaid. The hearings also revealed what former Deputy Treasury Secretary Eizenstat has called the ``double victims of history.'' These are people who purchased insurance policies before World War II in Eastern Europe, and we heard from some of those people today. The Communist regimes which came into power after the war nationalized the companies. They seized the assets and records and also assumed the obligations to make payments. While claims practices varied among governments, as a general rule payments were denied to those who emigrated. This effectively foreclosed indemnification to those who moved to Israel, the United States, Canada, or any other nation where the remnants of the Eastern European Jewish population fled. Very early on Allianz recognized that it was important to work with other people of good will to formulate a humanitarian solution to benefit the elderly Holocaust victims. Among those with whom Allianz met was former superintendent Neil Levin, who died so tragically on September 11th. Working with Mr. Levin and other insurance regulators, Allianz was proud to be a charter member of the international commission, representing RAS and all other of its affiliates. Allianz remains steadfastly committed to justice for victims of the Holocaust. It complies with the memorandum of understanding, researches every inquiry it receives, and settles all eligible claims. Over 200 claims have been settled by RAS alone, and another 20 from other affiliates. Allianz has also provided over 140,000 names to ICHEIC of Holocaust-era policyholders for processing at Yad Vashem in Israel. Now, Allianz is mindful that ICHEIC, which represents only about 25 percent of the pre-war European marketplace, might be inadequate to the task at hand. After all, about 75 percent of all inquiries and claims were likely to emanate from policies on companies that did not belong to ICHEIC. Allianz, therefore, became a founding member and leader of the German Foundation Initiative. The initiative and the Government of Germany in July 2000 produced a historic agreement to fund a German public foundation to provide the final capstone to all labor, insurance and all other issues arising from this most tragic period. The Foundation was created with the approval of the Governments of the United States and Israel, several major Jewish organizations representing Holocaust victims throughout the world, and five Eastern European governments. The German Government and German industry pledged 10 billion Deutsche marks. The overwhelming amount was directed toward compensating people who suffered as slave and forced laborers during World War II. Over the last year there have been ongoing negotiations between the Foundation and ICHEIC led by the former German ambassador to the United Nations Dr. Brautigam and Chairman Eagleburger, and I would venture to say that no one is satisfied by the pace of progress. And although I understand that the ICHEIC and Foundation negotiators do have disagreements, I still remain hopeful that they will be settled soon. In closing, I would like to thank you for this opportunity to testify and for the fair treatment accorded to me by the members of the committee. Thank you very much. Mrs. Morella. Thank you, Mr. Lefkin. [The prepared statement of Mr. Lefkin follows:] [GRAPHIC] [TIFF OMITTED] T7710.058 [GRAPHIC] [TIFF OMITTED] T7710.059 [GRAPHIC] [TIFF OMITTED] T7710.060 [GRAPHIC] [TIFF OMITTED] T7710.061 [GRAPHIC] [TIFF OMITTED] T7710.062 [GRAPHIC] [TIFF OMITTED] T7710.063 [GRAPHIC] [TIFF OMITTED] T7710.064 [GRAPHIC] [TIFF OMITTED] T7710.065 Mrs. Morella. Now I am pleased to recognize Mr. Kent. Mr. Kent. Thank you, Madame Chairwoman. Thank you, Members of Congress, for inviting me to testify. I am in a difficult situation today because I heard a lot of testimony, and instead of reading a statement, I would like to share my thoughts with you. I have a request to ask you, since I appear here maybe in a triple type of a position--No. 1, I am a survivor that went through the war in the ghetto and Auschwitz; No. 2, I am a member of the ICHEIC Commission; and then No. 3, I am a member of the negotiating committee of the slave and forced labor. And there were many statements and misstatements made here which I would like to share with you and give you my thoughts. So with your permission, please indulge me with the extra time. Thank you. Mrs. Morella. We will see how long it takes. Mr. Kent. Look, I waited 60 years for this opportunity, so I will wait another few minutes. What can I tell you? When I heard the morning session and so on, I almost came to the conclusion when I heard the statement--the adage which says, ``My mind is made up, so why do you confuse me with facts?'' There were two main questions which I heard: Why does it take so long, and why is so little paid out? And then, of course, was the question of ICHEIC. And let me make a flat statement, and I know, Congressman Waxman, I heard you a number of times on the television. You made sometimes very blunt and proper statements, and I would like to make a statement here, too. ICHEIC is not the criminal. It is the insurance companies and the German Foundation that are the criminals. They are the ones that are delaying the process. So let me just give you a little elaboration why. If you are going to compare ICHEIC, compare it to construction of a building. When you want to construct a building, you don't see anything. You don't see the building. First you have to buy the land, then you have to make the blueprints, then you have to lay the foundation, and then after a while you can see the real structure of the building. Here in ICHEIC, the situation was more complicated than in building the building, because you were dealing with five companies, right now actually we have six, because you have the Netherlands. But you were dealing with five companies. All of them had diverse interests except for one interest which they had in common: None of them wanted to pay anything out. The rest of the issues were diverse. For example, it was a question of the market share. It was the question of the currency evaluation of policy then and right now. There were the lists of unpaid policies. There was the appeal process. There was the audit process. There was the expenses. And in all of these things, I would say the biggest criminal was Allianz and the German Foundation, because when we are talking right now about the German Foundation and the so- called cooperation or noncooperation or the negotiation with ICHEIC or not ICHEIC, it has no relevance at all. The German Foundation should not, cannot, be a part of any negotiation with ICHEIC. They either belong and adhere to the rules of ICHEIC or they don't. The insurance issue was forced on us. To use plain language, I am not a politician, I would say it was a blackmail. It was a blackmail by Mr. Lambsdorff who said openly, if the insurance companies are not included in it, we have no deal on the German Foundation. The issue came to a head even when the Under Secretary, Deputy Secretary Eizenstat, said, ``you don't want to scuttle the German Foundation,'' to which I know I replied to him, ``no, we don't, but we don't want to scuttle ICHEIC.'' And the agreement was that the insurance companies would be subject to ICHEIC rules. The money which they are going to put to the Foundation will be a pass-through, nothing more, nothing less. And I don't want to hear--and I expressed myself this to Mr. Hansmeyer and everybody else, I am sick and tired of the negotiation about the Foundation. They have no place, they should not be taking place, because they are outside of the German agreement. Now, maybe by coincidence 2 days or 3 days ago I met Mr. Geier, who is the Minister of the lower department. He told me a very funny story. He asked me if I am going to be at the hearing, and I said yes. And I asked him, will you be there? And he said no. And I said, why not? Oh, because we don't consider Congress to be part of the government. This was news to me, that Congress is not part of the government. But if he said so, OK, it is a free country. He can say what he wants. So then he tells me, and after all, the agreement is between the two governments so that they are subject to the rules. So I said, if this is the case, if you say the agreement is between the governments and Allianz should obey the rule of the agreement, why didn't they pay the next 850,000 Deutsche marks which they were supposed to pay? After all, if they are subject to the agreement, and if they broke the agreement the next day, what would they fall back for the agreement? So what is the sense of talking about the expenses? The expenses are subject to the MOU. Allianz signed the MOU. They are responsible for the MOU. They are not responsible for any executive agreement which was made between our government and the German Government, which, by the way, specified that the insurance issues are subject to ICHEIC. So to negotiate for a year and a half, 2 years, when we are asking why does it take too long, if somebody will put an 800- pound gorilla in front of me and ask me to move it, it will take me 10 years to push it. So this is one reason why. Now, and the same problem is with the so-called GVD, they want their own rules. ICHEIC is handling six different insurance companies, all different countries. And to give to Germans a different negotiating point, it would be criminal. As a matter of fact, I wrote to Judge McCasey. I wrote to him on December 6th, and I will quote you part of it. And the question of insurance and how it fits into the overall picture of the settlement under the German Foundation agreement must be clarified; otherwise justice and survivors' interests will not be properly served. And I must bring to your attention that ICHEIC was established to resolve insurance issues in general and the German insurance companies in particular. It is important to note that ICHEIC was established approximately 2 years prior to the German Foundation. Therefore, to include the German insurance company in its present form in the framework of the German Foundation agreement would benefit the insurance companies to the detriment of the victims that they are supposed to compensate. This is particularly true of the GDV, since GDV has not yet signed it. If the terms of the German Foundation agreement pertaining to insurance are to be considered, then all of the conditions of the MOU agreement with ICHEIC must be included. There should be no exception to the German insurance agreement. And I expressed this thought a few times to our meetings of ICHEIC, and I have told them that I want to have the issues settled as fast as possible while I am still alive. You, ladies and gentlemen, heard the statement by the few survivors. We are not youngsters, so that there is no question that a lot of insurance companies were out again, they are out again, and unless we are going to put some brakes on them, they will not back down. There was a mention here by Mr. Hansmeyer and his quotes in the Forbes Magazine. I must tell you that since the time of the Forbes Magazine, Mr. Hansmeyer did not show up on any of our meetings, otherwise he was there all of the time. And I must tell you that after the statement was made, I have here a letter of May 18 which I wrote to Mr. Eagleburger pertaining to these remarks, and let me just read you a couple of sentences. If the statement made by Herbert Hansmeyer in Forbes was not enough, the remarks by Hans Sauering, representing Allianz, substituting for Hansmeyer, made on Thursday, May 10th added insult to injury when he quoted Mr. Hansmeyer and said that Allianz would be happy to approve payments for all insurance claims where the individuals can present them with the policies involved. I don't know whether or not you were present in the room at the time, but my reply to him, which still rings in my ears, was, how dare you make such a statement in this room when you know perfectly well that those who survived Auschwitz or any other concentration camp left with absolutely nothing. Only a few percent actually left with their lives instead of as corpses. I could speak on and on, but I---- Mrs. Morella. I bet you could. Mr. Kent. I tell you, I want just to end up one thing. That the statement made by the survivors before, and I accept them as facts, but ICHEIC to me was more than just individual cases, because you see those people that were here, first of all they were lucky enough that they survived. Few of us survived. But the second thing was very lucky that they had proper documentation. But ICHEIC is also working and trying to compensate people that don't have the proper documentation. How many of us could have it? And, therefore, the list of the people, the list of the names which we are fighting from the very beginning, and that was easy for the companies to do, only if they wished, only if they wanted to, because when we are talking about the date, what is the date? What meaning has the date of filing the claims if we don't have the list? So unless they will give us the list, there is no sense even talking about the date, because it is meaningless. If I postpone the date another 4 months, and I will get the list 8 months from now, the date is meaningless. And this is what they are doing to companies. And that is why I made this statement at the beginning: ICHEIC is not the criminal. The companies, the German Foundation, they are the criminals. Thank you. I am sorry if I took too long. Mrs. Morella. Thank you, Mr. Kent. We appreciate your passion and indeed your directness. I just want to mention and acknowledge that we have sitting there at the table, too, Israel Singer, vice president of the claims conference and chairman of the negotiating committee. I know, we hadn't planned that you were going to speak. If you-- you are here for answering questions, Mr. Singer, right? Mr. Singer. That is fine. Mrs. Morella. I know that Mr. Taylor gave comments on your behalf. Mr. Singer. He represented both of us. I just wanted to add one word. Mrs. Morella. Yes. Mr. Singer. Mr. Kent spoke with great passion. He did so because he sat for hundreds of hours, volunteer hours, during ICHEIC. We listened to Chairman Eagleburger make many decisions. I negotiated the original settlement with the chairman of German industry Dr. Genz and Mr. Hansmeyer. I flew at my expense by Concorde back and forth the day before this almost became the deal-breaker. The terms for that agreement were made by the three of us. The terms are included in the GDV. Those terms are not being listened to because Eagleburger isn't being listened to, because those terms included the chairman's decisions. We are making Eagleburger's job impossible. And they agreed to make that difference. I think what we are doing now is we are dragging our feet on something that has already been agreed to that should be said here. It should be said again and again, and it should be said by everyone to anyone who will listen. There is 550 million Deutsche marks available to settle claims. It is unacceptable to hear that out of 15,000 claims that were made to a German company, only 4 were settled when the money is available. I would like at this time to say, but also suggest, that there are some companies like Generali, that was said before by the chairman, that paid 548 through offers that were made. And I would like to include in the record the fact that they have paid close to $12 million. That is not enough, but it is a lot. They have their representatives, director, advocate Barak who is sitting here today. We need more cooperation from them, but more like the kind that they have given us so far. Thank you. Mrs. Morella. Thank you, Mr. Singer. I guess I will start off the questioning. We will probably get to some of the questions that you have been posing in your declarative statements to Secretary Eagleburger. I understand that only five insurance companies have joined the Commission. Allianz is the only German company, and they only represent about 15 percent of the German market. Do you think you are making any progress in getting the other German companies to commit to this process? Mr. Eagleburger. If you mean are we making any progress in getting the other German companies to join ICHEIC, no. They have made it very clear that they don't want to join. They won't join. The concept of the Foundation is in essence if that works, if that agreement works, then the non-MOU German companies are brought into the process through the Foundation. And then we would--for example, if ICHEIC--we have to work out the details yet, but ICHEIC--I am about to be corrected. We would have to work out the details, but then ICHEIC would be responsible for seeing that the claims against those non-MOU German companies were paid. So then ICHEIC would be in the process, but never will they join ICHEIC as such. And as I have been reminded by my good friend to my rear here, the MOU companies, you should remember, also have their German subsidiaries, and they are involved, but that is all. Mrs. Morella. Do you think the German Government is doing enough to help in the negotiations? Then I am going ask you about Congress' role. Mr. Eagleburger. That is a good question. I guess, Mrs. Chairman, I would say--the trouble, as I see it, this is only my own prejudiced view, but, as I see it, the introduction of the German Government into this process and indeed the introduction of the U.S. Government into this process has in one way at least complicated things. And is the German Government doing enough? The answer is they are doing all I think we can expect them to do. But it is not enough. In fact, to a degree, and again I know that the Ambassador to my left won't necessarily agree with this, but to a degree I think the rigidity that we have seen on the German side in these negotiations on the Foundation is to some degree a creation of the fact that the Foundation is created by German law. There are certain things laid out in the law that they must do, so that in effect, to some degree, I am negotiating with somebody who is bound by German law to which I am not bound. But how do you get a negotiator to change a position if, in fact, he is told by the legislature to do it? So there is no answer to your question. Mrs. Morella. Well, actually it is. But if you can go a little further about what role do you see that we in Congress can play to help you in your efforts to try to convince the German insurance companies to participate in ICHEIC? Mr. Eagleburger. That is the one question, Chairwoman, I wish you never asked me, because it is a tough one for me to deal with. I devoutly believe and have from the beginning that with all of the difficulties that have been dealt on this morning and I am sure will be this afternoon, with all of the weaknesses and imperfections of ICHEIC, I have always believed that if the governments would just stay out of it, in the end we would do better. And let me give you an example of what I mean, at least a partial example. Before the German Foundation, before the American Government and the German Government put their heads together and came up with this Foundation, within ICHEIC we were dealing with the problems of the five companies. And it is easy for me to say it now, but I will tell you that I happen to believe that if it had stayed this way, and the Foundation had not become an issue, we would probably be pretty well through most of this now. What has happened is because of the involvement of this German federation is that we have not only bifurcated, we have trifurcated--if there is such a word--the negotiations. We have to carry on. One, we have got the Foundation. Two, we have got the non-German MOU companies like Generali, where we made an agreement, again, much because of Mr. Singer over there. And then third, I have got three companies that haven't yet come to grips with the fact that they better settle some one way or another. That is XSA, Winterthur, and Zurich. So at one point we were going to be dealing with all of the companies. We would have one set of rules for everybody. Now, because of the Foundation, we have one set of rules for the Germans, for those German companies. We have got another set of rules for Generali. We are going to have a third set with AXA, Winterthur, and Zurich at some point, and, therefore, in my judgment, my job at least would have been a good bit easier if we hadn't had the involvement of the U.S.-German agreement. But I must say, on the other side of that argument, if this negotiation with the Foundation succeeds, we will have brought into the process a number of German companies that otherwise would not have been involved. So that is the payoff. And I suppose, in that sense, the Foundation is a good idea. It has made my life more complicated. That is not necessarily a particularly important question. And it is a long answer to-- attempt at an answer to your question. I must say to you I still believe that we would be better off if ICHEIC--and I know a number of you here think that ICHEIC is a total failure. Well, I can't argue with you other than to say what can you do to substitute for that failure I have yet to see. Chairwoman, I haven't given you an answer, but I would prefer that government stay out of it. Mrs. Morella. I think that is a good answer. You reached that point to--you were giving us some of the complexities. I note I have a copy of an AP report of the speech that you made, and you were asked the question about Allianz. You didn't really refer to them that much in your response to the question, the large German insurance company, of failing to compensate a single claim of the 4,800 claims submitted by the International Commission, and when you were asked that, how much have they paid by July 3rd, you said, ``A big fat zero,'' zero. And I found that to be kind of interesting. Mr. Eagleburger. So did Allianz. Mrs. Morella. I know my time has just about expired. I will just try, in response to that same question, to give Ambassador Bindenagel--it seems like the German Government should be able to exert some pressure on the German Insurance Association to join ICHEIC. Has the German Government done so? Mr. Bindenagel. Madame Chairwoman, in fact, before I get to that direct answer, I would like to say that the purpose of the two governments dealing with the insurance was in the context of dealing with all of the claims that were arising out of the Nazi era and World War II. So from the beginning, part of the discussion, when ICHEIC was approved at the very early part, we asked them to become part of this process of negotiation because the beneficiaries of ICHEIC and those who were not in ICHEIC would really be the same. We wanted the victims to be treated the same in fairness. We also had the view that insurance companies shouldn't have to pay twice. So underlying that, we felt it was very important that we continue the support that we had for ICHEIC from 1998 through the agreement in July 2000, and to incorporate the most difficult issue that Mr. Eagleburger has already pointed out: How do you get the 300 or 400 other companies in Germany that may have had policies during this period to be part of the process? The idea would be have them all join ICHEIC. They would not do that. The governments were very active in making--putting pressure. If you were putting the issue to the German Insurance Association that they should join with those German companies subsidiaries, as Mr. Eagleburger has pointed out, plus Allianz to join this process, it was a compromise. It was not easy. It is difficult, as we can see; is today still. They have not come together to deal with the additional claims-handling procedures to free the 550 million marks. Now, for the next phase indeed the government has been very active in encouraging the companies to be forthcoming in these negotiations. Both governments have tried to ensure that negotiators are focused on the issues and deal with the issues of appeals, audits, lists, and ultimately the issues of cost. Both governments are very engaged, but we are not the actual negotiators themselves. We leave that to Mr. Eagleburger and ICHEIC itself to deal with the negotiator Mr. Brautigam. Mrs. Morella. Is the State Department doing anything to try to get an agreement for the insurance negotiation? Mr. Bindenagel. Yes. The State Department, under the direction of Deputy Secretary Armitage, has been very, very actively engaged with the German Government throughout the last 15 months, particularly since the change of administration. Mr. Armitage has been very active in dealing with Count Lambsdorff and has instructed me to be actively engaged. I have met with all of the parties repeatedly. I have been on the phone with them in conference calls. I have met with them here in Washington and in Europe, and we have tried very hard to ensure that the parties are focused, moving forward on the issues, and being helpful whenever we can as governments to try to resolve issues that the governments can resolve. But, again, the negotiators themselves are the ones that need to come to the answers that are necessary to get this money freed up for ICHEIC. Mr. Eagleburger. Madame Chairman? Mrs. Morella. Yes. Mr. Eagleburger. It occurred to me as I was listening here, a specific answer to your question would be, yes, the German Government, particularly with regard to its own entities, like the BAV, the institution that handles the insurance, that when those institutions become excessively negative, as this one is, it would be a wonderful idea if the German Government could tell them to straighten up and fly right. Mrs. Morella. My time has expired, and the Chair will now be--Mr. LaTourette will take my place. I am very pleased to recognize Mr. Waxman for his questioning. As you all know, Mr. Waxman has been the leader in this entire issue. Sir. Mr. Waxman. Thank you very much. And I appreciate the testimony of all of our witnesses today to help us try to understand how we have gotten into the situation we are in and how we can move forward in a constructive way. ICHEIC was established to facilitate compensation of individuals for their Holocaust-era insurance policies, and these are people who have not yet been paid. So I want to start my questions by examining whether ICHEIC has succeeded in meeting this goal. Mr. Eagleburger, according to the data you provided in your November 7, 2001, letter to the committee, to date 77,800 claims have been received by ICHEIC, yet member insurance companies have made offers on only 758 claims. That is a minuscule compensation rate of less than 1 percent. And I would like to have you take a look at that chart. It breaks down the statistics by each member company. Allianz, the German insurance company, has been sent 15,000 claims and made 4 offers. Allianz's subsidiary, RAS, has been sent over 25,000 claims and made 183 offers. AXA of France has been sent 16,000 claims, and has made 13 offers. Generali of Italy has been sent over 40,000 claims and has made 548 offers. The Swiss company Winterthur has been sent 6,500 claims and made zero offers. And the Swiss company Zurich has been sent 9,000 claims and made 10 offers. Mr. Eagleburger, would you say that this rate of claims approval is satisfactory? Mr. Eagleburger. Of course not, Mr. Waxman. But I would also say, don't get trapped by the figures too much here in the sense that, as I tried to indicate, in terms of the number of claims that are made, where you can clearly identify a company, it is substantially less than the numbers we are now talking about. Having said all of that, there is no question it is not satisfactory. I would only say to you this. Those 500 and whatever that have been paid by Generali or whatever, that is 500 and some more than were paid in the preceding period, but it is not satisfactory. Mr. Waxman. Well, I would like to have a second chart put up, because according to the data you provided the committee, even if you look at only the claims that named companies, the member companies have approved less than 10 percent of those claims. Now, Dr. Brauns testified earlier today, and he highlighted this issue. He said in the few cases where offers have been made, not all claimants have found the offers acceptable. Dr. Brauns had a situation where he had a policy with Generali. He had a copy of the policy, and it took him decades before anything was acknowledged. And then when they acknowledged it, after 50 years of pursuing the claim, he was offered $5,000. That doesn't really seem like a very sincere approach from a company that has been held up to date by a number of witnesses as one of the best. Mr. Eagleburger. Several points I would make there, Mr. Chairman. Again, I am not going to get into the business of defending the companies for things I think they have done wrong. But having said that, and you said it yourself, after 50 years you finally at least got an offer. It is inadequate, I assume. I don't know enough about the case, but it is inadequate. But at least ICHEIC has forced attention on the case. He has a right of appeal. In the specific case, I can't judge, nor I suspect, sir, can you, the merits of the case until I look through the entire file. I will tell you that I think, and I tried to indicate that much earlier--I think the companies, some more than others, are, in fact, playing fast and loose with the decisions I have made on how the claims ought to be treated. I can only tell you this, and I recognize the question of time and age, but I can only tell you this game isn't over until--if you don't mind my saying--until I say it is over. And I mean by that if I have to get somebody to go back six times on a meritorious case to get the companies to recognize their responsibility, I will do it. Now---- Mr. Waxman. Well, let me interrupt you. Mr. Eagleburger. I can't get into all of these cases. Mr. Waxman. Well, you can't get into them, but we can see the results. I know you are saying that if it weren't for ICHEIC, there wouldn't have been some successes, but it doesn't look like there are very many successes. Let me give you another case from a constituent of mine, Mrs. Judith Steiner. She had her claim rejected by RAS, which is a subsidiary of Allianz, and she filed her claim with a copy of the receipt for the last premium payment her grandfather paid before the family was taken from Hungary and sent to the concentration camp. The company's insignia was on the receipt, yet RAS responded that her claim was denied because the existence of the policy could not be corroborated in the company's files. So what would you do about that if she came to you, and she probably has? Mr. Eagleburger. She has not, not as far as I know. But I suspect that is, in fact, the case I just mentioned earlier. Let me just finish. The fact of the matter is in that case, and in any number of these other cases, as we find them, we are going to go back to the companies again, and we are going to tell them we want an explanation of why the decision was made this way. And if I have to go back to them 16 times, I will do it. Now, the problem here is that this takes time, I know that. That is awkward. The other side of the problem is that, as I indicated to you, I am going to put together a policing team that will try on a basis of sampling at least to keep checking on how well the companies are doing. The best I can tell you, Mr. Waxman, is that we will do what we can to force those companies to perform as they are supposed to on the treatment of these claims. Mr. Waxman. Mr. Eagleburger, I know you will do what you can. It may be that you don't have the authority to tell these companies what to do. That is a fundamental problem. But what we have are people who have clear documentation, and they can't get any satisfactory results. Mr. Eagleburger. So far. Mr. Waxman. Well, this is 50 years. Mr. Eagleburger. I can't be responsible for that. Mr. Waxman. ICHEIC has been in operation for 3 years, and you spent approximately $40 million, yet despite spending $40 million, ICHEIC has resolved only 758 claims out of 77,800. This seems like an extraordinary expenditure of funds for a very meager result. One of the main functions of ICHEIC is to publish the names of Holocaust-era insurance policyholders so that individuals can learn whether they or their family may have a claim. And according to data provided to the committee by ICHEIC, the insurance companies provided only the names of 9,000 policyholders to ICHEIC. Mr. Eagleburger, after working with these companies for years, ICHEIC has been able to persuade--you have only been able to persuade them to list 9,000 eligible claimants. Is that a satisfactory result? Mr. Eagleburger. You know, having worked for them for years, 2 years is not a decade, it is 2 years of which a fair amount of time, at least in the beginning, was trying to get things structured. And, yes, it costs a lot of money. In the process, however, we have, first of all, established a fairly substantial list, and I would say to you, no, it is not adequate. This is an ongoing process. This is not something that stops tomorrow morning. It is fairly clear that there is still a great deal that has to be done. Having said that, I will come back to you one more time and say it is more than was done before, and I am not going to accept responsibility for the last 50 years. I am going to accept it for the last 2. And I would only say to you, sir, that while I have heard a great many complaints about what we have and haven't done, we are certainly not by any means perfect, I haven't heard anybody come up with any suggestions on how to do it better. And, in fact, I would point out to you that until ICHEIC was, in fact, established, nobody, including members of this committee, was out there talking about some system that would be put into place to accomplish what we are now trying to do. So, we haven't done it perfectly, but we have done more than was done in the past by anybody. Mr. Kent. Congressman, can I throw my 3 cents on that? Mr. Waxman. No. Just a minute. You say that progress is being made, but no names have been added since April to the list of people who have insurance claims. There is already---- Mr. Eagleburger. What? Mr. Waxman. No names have been added since April, I understand. Mr. Eagleburger. That is not true at all! Mr. Waxman. They are not on the Web site. ICHEIC has had $40 million--Mr. Eagleburger. Mr. Eagleburger. Yeah, go ahead. Mr. Waxman. You have had $40 million to spend money to tell the world, come to ICHEIC if you have got a claim. And you have translators and Web sites and radio stations and all sorts of expenditures. Then people call ICHEIC and they send in their claim, and then they never hear from anybody because you send it on to the company, and then there is no response. And we don't even have the lists. Now, it is not just your fault, but I can't say that this system is working for the people who are to be helped. And if the system is not working, we've got to try to make it work or change it and do something else, because time is running out for so many of those people. Mr. Eagleburger. The Congress of the United States, the U.S. Government, other than this exercise of Bindenagel, had nothing to do with the establishment of ICHEIC. Now, if you people want to get into the middle of this thing, as you now sit here and sound as if this is something that you have been responsible for, or you are about to be responsible for, be my guest. If you want to pass laws and do all of that sort of thing, you go right ahead and do it, and then you see how successful you will be. You won't be successful. We have been more successful than anybody in the last 60 years on this issue. And you expect in 2 years that we are supposed to make up for 60 years, and I am telling you that is nonsense. We have not been--we are not perfect. We have spent a lot of money. I think the Jewish community would say to you that one of the reasons the money was spent was, in fact, so we could get to the Jewish community and tell them what the possibilities now were. But I am not going to argue that we have been greatly successful, but when you sit there and throw back at me the $40 million, and we have only produced so much in the way of results, No. 1, you don't understand what the $40 million was spent for, and No. 2, you expect that we are going to accomplish in 2 years what nobody, including this body, was able to accomplish in 60. Mr. Waxman. Well, we have asked you in questions that we sent in advance of this hearing for how this money was spent. This $40 million on administrative expenses is twice as much as the money that has been offered to survivors under the process. And we asked you, for example, the level of ICHEIC's officials salaries and expenditures on international meetings. For example, you are aware of this, I am sure, one article reported participants in ICHEIC conferences for the most part traveled in business class, stayed in hotels that cost over $500 a night, and under these circumstances, I think it is reasonable for Congress to ask for a precise accounting. Mr. Eagleburger. Why? What has that got to do with your oversight responsibilities on the Foundation? Not one thing, No. 1. No. 2, I will be happy to answer the questions, and, in fact, we gave you this because I am not trying to hide something. But I am not about to accept for 1 minute that this committee has oversight responsibility on what ICHEIC has done outside of the Foundation. And if you want the figures, and want to do it in a way that doesn't ask me to produce 100 copies of something in 2 days with questions that are none of your business, I would be happy to do it. But I am not going to sit there and try to answer some of the questions you have asked, like how many meetings have there been? How much did they cost? I haven't even the vaguest idea on some of this. We would have to pull it together. But I am prepared to tell you how much we spent. I told you a great deal about it here, but I am also not prepared to accept that I am going to have to sit there and defend to you when we have flown business class, what kind of hotels we have stayed in, and so forth. I will give you the figures, but I am not going to sit here and spend my time trying to tell you something that frankly is none of your business. Mr. Waxman. Well, I thank you very much for telling me it is none of my business. I do want those figures. And we will insist that you send them to us. Mr. Eagleburger. Well, you don't insist to me. If you want to subpoena them, go ahead. Mr. Waxman. We will insist that you give it to us. And let me tell you---- Mr. Eagleburger. I am not going to do it! Mr. Waxman. Let me tell you why I called you here. I have a constituent who has got a claim for 60 years. She has got the receipt from the insurance companies, and she goes to ICHEIC, and she gets a blank form letter, and you are out spending money telling her to come to you. And the companies don't care. And you tell us it is none of our business, and you talk---- Mr. Eagleburger. No, no. Mr. Waxman. Wait a second. I didn't interrupt you. When you had these panelists early this morning and you came in and you said these people this, these people that, you people this, you people that, those people that testified in the morning session lived through the Holocaust, had claims for insurance payments. They had pretty substantial claims. They have been ignored, and they have been lost in the process. You may think that they are mistaken in one place or another in the way that they have expressed themselves, but I think you are a little disdainful of them and us. Mr. Eagleburger. Oh, for heaven's sake! That is the dumbest thing that I have ever heard! I am disdainful of them? I have spent 2 years trying to get this thing to work, and I am disdainful? I may not have done it well, but don't you tell me for 1 minute that I am disdainful of these people who have suffered the way that they have. What do you think I tried to say today but that I am devoted to this? Mr. Kent. Mr. Congressman, I have got to interrupt for a second, because I don't like what is going on. Sir, I have told you at the beginning of my remarks, ICHEIC is not the criminal. Larry Eagleburger is not the criminal. You have no right to talk to him like this! I was here during the meeting. He is for the survivors. He is fighting for them. You point your fingers at the companies. You point the finger to the German Foundation, just like I did. Then you will have the right to talk to Mr. Eagleburger the way you do. You respect. I am telling it to you. $10 million was spent on this advertising. You know what, sir? If you would know about it, if these companies, Allianz and the others, would send you the list, then instead of $12 million, maybe $40, $50 million would be paid. So why don't you pass a law that they should be thrown out from the United States if they don't respect these policies. This you can do, but don't come here, and I don't want to hear the way you talk to Mr. Eagleburger. I have too much respect for you, sir. Mr. Waxman. Thank you. Mr. Kent. I have respect for you, too. Mr. Waxman. Then let's all respect each other and stop screaming at each other. And I apologize if my voice was raised, but I have a reaction to others who have raised their voice to me. Mr. Lefkin, you are here representing one of the major companies, a company that is part of the ICHEIC funders, part of the ICHEIC process. And I made reference to a constituent. She has the receipt for a premium payment was made by her grandfather before the family was taken from Hungary to the concentration camps--this was to RAS, a subsidiary of Allianz-- and the company just said no. They can't substantiate it. We hear other testimony that the companies--according to Mr. Kent and Mr. Eagleburger--the companies are not doing what they should be doing. How do you respond to that? Mr. Kent. Yes, I respond to that. Pass the law that they should respond. Mr. Waxman. Thank you very much. Mr. Lefkin. Mr. Lefkin. Well, thank you, Congressman Waxman. Two things. As it relates to that particular case, I will be delighted to review it, to make sure that it gets the appropriate review again and get a response back to you and to your constituent. I would also like to put into perspective some of those numbers. We have heard large numbers bantered about, 13,000 claims submitted to Allianz. These are 13,000 inquiries, and they relate to the entire German marketplace. Allianz is the only German company that is a member of the international commission. And even the claims where they identify Allianz, a large percentage of them identify Allianz mostly because it is the most well known German company. They are not necessarily Allianz claimants or Allianz policyholders, and in most instances where they are Allianz policyholders, they have been paid in the past. Mr. Waxman. Well, Mr. Lefkin, according to that chart that I put up, Allianz has received 15,000 claims and made 4 offers. How can you say that you are serious about paying reparations when you have recognized only 4 out of 15,000 claims as legitimate? You say that there are valid reasons for rejecting claims, but, again, it just seems to me a lack of sincerity on the part of the company or an eagerness on the part of the company not to pay anything if there are so few that have been acknowledged by Allianz. Mr. Lefkin. No. Again, the number I received is 13,000 inquiries that were submitted to Allianz, and we determined about 10,400 of those, our research indicated that there was no connection to any of the Allianz German insurance companies. Another 1,700 cases are being actively reviewed. But, again, Congressman Waxman, what is being labeled a claim is more often an inquiry. This is merely anecdotal information, sort of anticipating, my father must have had an insurance policy with some German insurance carrier. Sometimes they mention a policy, it could have been Allianz because Allianz is a well-known company, but that doesn't necessarily mean it is a claim, but we take any inquiry and every claim quite seriously. Mr. Waxman. I hope you will take a look at this one from Judith Steiner, because it seems to me a clear case where she has paid for a premium with RAS and has been quite ignored by the claimants. Mr. Taylor, how do you respond? Are the companies doing what they should be doing? Mr. Taylor. No. As I acknowledged in my testimony, I think there are some issues of principle where we have a difference of opinion in terms of what the rules should be. And we also have a feeling brought out by anecdotal and individual cases that we are seeing where we feel that the rules that are part of the ICHEIC process are not being applied in the spirit in which we feel that they should be applied. And I wanted also to just come back to the earlier question. Again, there is no system that is perfect in the ICHEIC system. I think everyone agrees, including those individuals in ICHEIC, it is not a perfect system. At the moment we don't have an alternate system, and our view is that what we need to do is try and make the system work, make sure that we have lists, make sure that those claims that we have received are matched to lists that we will get, to make sure that the list is available so people will know whether they have policies or not, and to make sure that the system works. I think, in my view, let's take the system, let's fix it, let's do the best that we can with it. We don't have an alternative at the moment. Mr. Waxman. Mr. Lefkin, Allianz is the largest German insurance company, but you have informed the company that it provided only 308 names to ICHEIC for publication. How can you possibly explain publishing only 308 names? Mr. Lefkin. Congressman Waxman, Allianz did submit 140,000 names to ICHEIC last year, which were to be turned over to Yad Vashem for processing to cross-check, to find out which may have been victims of the Holocaust. It is my understanding that because of some difficulties experienced by Yad Vashem, that those names have not been processed. Mr. Waxman. Somebody testified earlier that there is an objection from the companies for Yad Vashem to make those names available. Is that an accurate statement? Is Allianz or the other companies objecting to that? Mr. Lefkin. Well, we have always agreed, we issued an agreement Allianz, under the auspices of Chairman Eagleburger about a year and a half ago that we provide these names to Yad Vashem, they would be processed, and that they would try to ascertain which of those might belong to Jewish policyholders, people who were persecuted or subsequently lost their lives in the Holocaust. We refined those numbers further. We would investigate those. If there were unclaimed policies, those names would indeed be published. Mr. Kent. I want to make one correction, that they gave us the name after 2\1/2\ years of fighting, I mean daily fighting. It is not that they came in, opened their pocket and said, ``Here you have the names.'' They did not. It was 2\1/2\ years of fighting. And second, they have many more names in their data base which they are hiding, which they are not giving to us. So this reply is not a reply to me, because they are hiding what they have. And they didn't give it willingly, what they are appearing right now we gave that. They didn't give us. We fought for it for 2 years. That is a difference. Thank you. Mr. Waxman. Mr. Singer, how do you respond to the failure of the companies to give out the names? Mr. Singer. Well, I think some of the responses that have been given have been partial truths. I think you have gotten the full list, that is true. There were 15,000 claims, not inquiries. Of those, there were, 8.8 percent of them, about 1,200 of them, that actually named Allianz, and of those 1,200 that named Allianz, in some cases with documentation, only 4 had offers made. That is, I think, not a good record. So let's just respond on that point. But if you want to go through the list itself, I think, Congressman, you have made a point, and that point is a very, very clear point. But I think to take ICHEIC and make ICHEIC the whipping boy here today is an error. I say that again as the negotiator. And I want to do what they taught me in law school. We have 500 million Deutsche marks available to be paid. There must be some objective reason why the companies are dragging their feet, and I would like to posit here at this committee, if you permit me for 1 minute, the reason. The reason for that is because they want to claim that they had to pay protection money. We take objection to that. We feel that since the deal was cut, the money is there. This is not about the money, it is about the processing. The processing is not ICHEIC's fault, the processing is the companies' fault. The companies aren't doing this in a forthright manner. They have six guidelines with regard to how to do it, and they come back each time with three no's for you. It is Khartoum all over again. You could do one thing. You could force them to try and be more responsive. It is not about the money. It is about getting your constituents the money which already exists. That is something which is inexplicable to me except for bad faith on their part. It is not ICHEIC's fault. Mr. Waxman. Well, I have introduced a bill with Congressman Eliot Engel, H.R. 2693, the Holocaust Victims Insurance Relief Act, which would require all insurance companies operating in the United States--because those are the only ones we have a connection to--to publish basic policyholder information for all policies in effect in areas under Nazi control between 1933 and 1945. The information would be publicly disseminated through the National Archives. Companies that fail to comply would face financial penalties. Do any of you disagree with that idea? Mr. Eagleburger. No. Mr. Waxman. So, hearing no dissent. Mr. Lefkin. Mr. Lefkin. I would have to sort of analyze the legislation. As you probably imagined, Congressman Waxman, there is a fairly complex area relating to both European law, and Congressman Clay referenced earlier in his opening statement that oftentimes, you know, many of the European Governments, particularly Germany, have very strong privacy provisions. So the export of public information relating to insurance policies is oftentimes not possible to be transmitted outside of the country. So I would have to reserve judgment on the legislation, but I do know that there were very strong practical difficulties in implementing it. Mr. Bindenagel. Mr. Waxman, the State Department has also discussed with your staff some of the concerns that we have with this bill. Mr. Waxman. What concerns are they? Mr. Bindenagel. Some of those concerns are about extraterritoriality, application of U.S. law. Mr. Waxman. I couldn't understand, Ambassador, your testimony when you said you are not interfering with people's rights to sue, yet you are--you urge in the courts that they not allow the lawsuits to go forward. Isn't that interfering with the right to sue? Mr. Bindenagel. No. That is a very, very important question, Mr. Waxman. I am pleased that you are asking it. What we as a government did is agreed to the creation of the Foundation, which, as you have heard today, supports ICHEIC and has provided 550 million for the insurance, but 10 billion marks--rather 550 million marks and 10 billion marks over for slave and forced labor and other issues related to the Nazi era and German claims. In exchange for that, that is in part of the understanding and part of the agreement that we reached, the U.S. Government pledged, committing itself to filing statements of interest that this Foundation, which is supporting ICHEIC, would be, in our view, the best remedy for resolving these issues 50, 60 years after the fact, and that we would go to court and we would argue to the court that these cases brought before them should be dismissed on any valid legal ground. That is to say, it is in our policy interest that this Foundation be successful, that they reach out to the million survivors who have not had compensation over the last 50, 60 years, and that we resolve banking and property issues, and we resolve insurance issues through this mechanism. It allows, however, that if an individual claimant wishes not to participate, that is their right, and they may certainly sue in court. Mr. Waxman. Now, you have already gone into court and made this representation which is adverse to the claimant's interest in the court case. Is that because you are satisfied that the agreement is being lived up to and that people are getting compensated through this Foundation that was negotiated? Do you feel that has been a success? Mr. Bindenagel. We do. We have gone into court several times, and dealing with several statements of interest in 60 cases which we have asked and argued in---- Mr. Waxman. I know you are successful in stopping those lawsuits, but are you successful in getting people compensated through this agreement that the U.S. Government negotiated which would set up a fund to compensate them? Mr. Singer points out that he thinks it is a failure because the companies haven't put up the money. Mr. Bindenagel. We are very pleased that the German Foundation will reach out to some 600,000 former forced slave laborers and pay out 2\1/2\ billion marks by the end of this year. As I said in my testimony, we are not pleased, we are disappointed, that on the insurance side that these issues, procedures, the processing of claims is not yet operational. Mr. Waxman. Well, see, slave labor payments may be made. They didn't have to be tied together with the insurance limits, except for the fact that Germany and Austria wanted to end it all and say this would be the maximum liability. So on the insurance side of things, they are not getting the money for the insurance claims, and the U.S. Government is going into court and saying these people shouldn't be able to pursue this lawsuit because it is adverse to the interests of the United States that has negotiated a treaty. Aren't you, in effect, doing your part of the bargain and the other side hasn't done their part of the bargain? Mr. Bindenagel. Yes, sir. We are doing our part of the bargain. We have not been successful in making this operational. We have been working very actively in support of all of the people on this panel and the others on the German side to ensure that these issues are resolved. They have not done that yet. And we are continuing, and we appreciate the opportunity to raise and discuss these issues here. But, yes, sir, we are working very clearly to that end. Now, with regard to the lawsuits themselves, those lawsuits were dismissed in the insurance cases, but they were dismissed also by all sides, but with the provision that if this doesn't work, then they can be reopened. Mr. Waxman. Reopened where? Mr. Bindenagel. In the same court under Federal Rules of Procedure. Mr. Waxman. I want to pursue the question of the audit process. Mr. Eagleburger, I'm interested in gaining greater understanding of that audit process. Mr. Eagleburger. Yeah. Mr. Waxman. Your November 7 letter says that a company can only issue a final decision on a claim after its compliance with ICHEIC standards is certified by audit. Is each specific claim reviewed by an auditor? Mr. Eagleburger. No. Mr. Waxman. Are the audits conducted by independent auditors and who selects---- Mr. Eagleburger. Yes. Yes, they are. Mr. Waxman. Who selects them for each company? Mr. Eagleburger. They have been selected from within ICHEIC. We have an auditor from ICHEIC. They have an auditor and the two of them then select the third. Mr. Waxman. Mr. Shapo, is the NAIC confident that the ICHEIC audits are independent and thorough? Mr. Shapo. They're still in progress, Congressman. I think that the framework of the audit process is a thoughtful one that provides accountability to the system. Mr. Waxman. Mr. Eagleburger, could you describe the status for the required audits for each of the companies required by the MOU? Mr. Eagleburger. Would you say that again? Mr. Waxman. The status, describe the status--I'm turning to the audits required by the MOU. Could you describe the status of the required audits for each of the companies? Mr. Eagleburger. Yes. I'll have to check with my friends here, but just a minute. AXA and Zurich have been completed. Winterthur will be completed next week. And what about the others? All of them will be done within the next month. Mr. Waxman. Mr.---- Mr. Eagleburger. And I don't know what they say at this stage. Mr. Waxman. I'd like to have us be able to review copies of the audits of the member companies, and we'd like to ask you to submit those audits, provide for the committee the audit reports upon their completion, if you would. Mr. Eagleburger. Mr. Waxman, I will have to take that under advisement, but my concern is I think that those audits were all done on the basis of an agreed confidentiality. But let me check it. Mr. Waxman. Mr. Lefkin, in our letter to Allianz, Chairman Burton and I requested a copy of the audits of Allianz referred to in a July 2001 Los Angeles Times report. The article stated, ``Officials at Allianz say they had launched an internal audit of their prewar policies even before the International Commission was formed. The audit of a sample of policies revealed very few that were unpaid and showed that offers had been made on those,'' said Allaener, the company spokesman. He added that ``Arthur Andersen, the large public accounting firm that did the audit in 1998, concluded that completely reviewing the company's files would have taken 1,529 person years.'' Allianz's response to my request for this audit, however, stated that this report about this audit ``did not come from Allianz nor our auditors and we cannot comment on it.'' I found this strange since the article is directly quoting the Allianz spokesperson. Can you commit to providing the committee with a copy of the audit referred to in this article? Mr. Lefkin. I'd be delighted to, Mr. Chairman. I think we have provided to a number of regulators, including Commissioner Reson and Commissioner Bernstein in Minnesota, on a confidential basis the methodology that was used in that audit, and I'd be delighted to share that with you and your staff. Mr. Waxman. OK. Now I want to go into the question of the nonmember insurance companies, most of the German insurance companies are not currently participating in the ICHEIC process. This is putting the survivors and their families in an impossible situation. They can't file effective claims without knowing which company held the policy of their families or whether their families had a policy at all unless the companies come forward and identify their policyholders. I understand that there are ongoing negotiations between ICHEIC, the German Foundation, and the German Insurance Association in an attempt to get non-ICHEIC insurance companies that issued Holocaust-era policies to join ICHEIC. In fact, I believe one negotiation session occurred---- Mr. Eagleburger. No. Mr. Waxman [continuing]. Yesterday in London. Mr. Shapo, I understand that you flew in from that session to attend this hearing. Could you give us an update on the negotiations and what are the major sticking points? Mr. Shapo. I covered this to an extent in my testimony, and I'm uncomfortable giving a high level of detail about my negotiations as they're ongoing negotiations. Right now we're working on the--what I would call the claims-related issues-- list, audits, and appeals. I do think, as I said earlier, that Ambassador Brautigam has put substantial proposals on the table. I do not think that they are completely adequate for us to sign off on. The appeals negotiations I would characterize as nearly complete. The lists negotiations, we are still waiting for some more information about the quality and the nature of the databases that the non-MOU companies have. Depending on the results of those inquiries, I think we've got a decent basic framework that should provide the basis for an agreement on lists provided that we get the types of answers we're looking for in these inquiries. Audits at this point are a big bit of a sticking point, and again I don't feel comfortable giving details about what the disagreements are about but we've got significantly more work to do on audits. I mentioned the cost issue which, you know, as I said, was the main issue that was raised in this resolution that I offered at the NAIC and that's a very significant gulf between the two sides. Mr. Waxman. Mr. Eagleburger, do you want to comment on this? Mr. Eagleburger. I want to correct one thing. These are not negotiations about bringing these companies into ICHEIC. They are negotiations which would deal with the issues where ICHEIC requires things like audits and so forth. In other words, if we're going to have an agreement with the Foundation, the Foundation is going to have to agree to a number of things that are important to us, to the regulators, and to the Jewish community, audits that are adequately done, appeals and so forth, but it's not a negotiation to bring those companies into ICHEIC. They have made it clear they won't do that. Mr. Shapo. Congressman, I think what we would likely see come out of this is some kind of an agreement between ICHEIC and the Foundation and the German Insurance Association that would be memorialized in a way that--well, if it's to succeed and we're to sign off on it in a way that would basically incorporate the fundamental parts of core ICHEIC processes on all the issues we've been talking about here today. Mr. Kent. Congressman, you were right before when you said that the German Foundation agreement about slave and labor is beginning to work. However, the one issue is the insurance. It is not working. The negotiations already a year and a half. I'll give you an example. There is the Net Alliance Association of Insurance Companies. Then the negotiation went down one, two, three, and they belong, they are the six members, not the German Foundation, not the association of the Germans. And this is not working because in the first place, as I said before, the German Foundation was supposed to have been only for slave and labor and then only through a blackmail, and that's the only way I can use it. This was thrown into the insurance and we have trouble. Chairman Eagleburger is right. If not for the government interference of throwing in--I mean the German Government of throwing in and then having an ambiguity because we have to realize that ICHEIC is a private corporation. It is---- Mr. Waxman. Thank you, Mr. Kent. I appreciate--I agree with what you're saying. I do agree that has become a real problem. I received a copy of the proposed agreement dated March 2000, drafted by the German Insurance Association, and I find a number of the German Insurance Association's suggestions troubling. For example, the association wants insurance companies to have a veto power over ICHEIC decisions. In addition, it wants a German-only appeals process outside of ICHEIC. Also it wants to limit the publications of policyholder names and wants to have German-only auditing, avoiding true independent auditing. Mr. Eagleburger, can you describe ICHEIC's response to these proposals? Mr. Eagleburger. Yes. If there weren't ladies present I'd even do it more clearly, but we've made it very clear we will not accept that. Mr. Waxman. And how about you, Mr. Shapo? Mr. Shapo. I have the same position. Mr. Waxman. Perhaps most troubling is the efforts made by insurance companies to receive large reimbursements. Mr. Eagleburger, what is ICHEIC's position on the company's efforts to recoup expenses? Mr. Eagleburger. To the degree we've come to grips with it, Congressman, and we have not finally yet, we're all over the lot within the Commission on the subject, and it's an issue that when we have proceeded further with the negotiations on audits and all these other issues that we are going to have to face--well, we run the gamut now of those who are totally opposed to anything to some who are prepared for a modest reimbursement, nothing like the companies desire, and I don't know where we'll come out, frankly. It's going to depend to some degree, I suppose, on the quality of the rest of the agreement. My personal view--and I've made it very clear, my personal view is I think the idea is a terrible one. But this is one ICHEIC as a whole is going to have to deal with. Mr. Waxman. And Mr. Shapo, do you want to comment on that? Mr. Shapo. Yes, Congressman. I think I devoted four full pages in my written testimony to this. It's a very byzantine and complicated---- Mr. Waxman. We'll accept that for the record---- Mr. Shapo. But the bottom line is I think that the proposal is contrary to the letter and the spirit of the executive agreement, and I furthermore don't think it's consistent with the German law. Mr. Waxman. Mr. Lefkin, what is your position? Mr. Lefkin. Allianz has certainly fulfilled its obligation. It has provided 20-40 million Deutsche marks to Mr. Eagleburger and the International Commission, and it's operating under the auspices of the German Foundation law as well and has had all of its funding requirements there. Mr. Waxman. Given that the majority of German insurers have still not agreed to join ICHEIC and the questions raised regarding whether exhaustive lists of policyholder names have been provided by member companies to ICHEIC for publication, it seems logical to question whether the February 2002 deadline for filing claims remains appropriate. Mr. Eagleburger, is the current filing deadline fair or do you think it should be changed? Mr. Eagleburger. Well, the answer is I personally think it's going to have to be changed. This also is an issue that's going to have to be debated within ICHEIC, but certainly if we have new names, I personally believe it would be an outrage not to give them an opportunity to file their claims in a reasonable way. Now, whether the Commission will agree with me or not, I don't know--well, I do know. We'll have the regulators and the Jewish groups in favor of it, and we'll have the companies opposed. And under those circumstances I suspect we'll end up extending. Mr. Waxman. Well, it certainly seems to me incomprehensible that people should be barred from going forward with claims if they didn't even have the opportunity to get the lists. Mr. Eagleburger. Yes. Mr. Waxman. Mr. Shapo. Mr. Shapo. I'll stick up for the companies and I will assume that they will not be so preposterous as to suggest that a name that a claimant derives from a newly discovered list should not merit being processed whether it takes--whether it's received before February or after February. Mr. Eagleburger. Mr. Waxman, this does lead to one other comment I'd like to make which is at the heart of a lot of my problems now and that is if we extend, it's going to cost more money to keep ICHEIC going. And I have--at this stage at least I've been in a running battle for some months now with the companies to provide us with more funding. August 2000 was the last time they gave us anything. At this point we can operate for a while, but I will tell you now that I am going to raise the decibel level on this issue substantially within the next few weeks and either the companies are going to provide us with sufficient funds to continue, or we are going to have a very serious problem, which I can only tell you I will not take lying down. Now, at the moment we'll be much better off if we get an agreement with the Foundation because then there will be substantial moneys flowing again, but if we don't get that agreement with the Foundation in some reasonable period of time, we're going to have troubles, and I should say to you in my judgment the companies, the MOU companies now, the companies within ICHEIC are perilously close to my having to rule and tell everybody publicly that they have not been--what's the word we use? They have not been in compliance with ICHEIC and under those circumstances, courts and so forth, may do whatever they wish, but either this issue gets settled and soon or we're going to have a donnybrook. Mr. Waxman. As I understood, you think that we ought to extend the deadline and connect that to the publication of the policyholder list. Do you think we also ought to have an extension of the deadline connected to fundamental reforms of the ICHEIC process such as new guidelines for ICHEIC with regard to expenditures? Mr. Eagleburger. I hadn't thought about it and I guess the answer is I don't know that we ought to extend the dead--if we're going to extend it at all for the claimants, we can certainly use that time to do whatever sort of reforms we agree need to be done, but you haven't started beating my wife yet, Mr. Waxman, and beyond that I really can't go---- Mr. Waxman. Do you believe, Mr. Eagleburger, that there should be sanctions against insurers that have failed to join the settlement process? Mr. Eagleburger. Tough question, and I'll tell you why. The answer is by and large, yes, I think we should. I have spent too much time in the U.S. Government watching sanctions be of very little use but if we can fashion the right kind of sanctions, I'm not sure--I'm assuming your question means U.S. Government sanctions; is that correct? Mr. Waxman. I would think those are the only ones we'd have access to. Mr. Eagleburger. Well, the answer to that is in a general way, yes, I don't object to it. We'd have to talk about the specific circumstances---- Mr. Waxman. Anybody else---- Mr. Eagleburger [continuing]. Under which they would be imposed. Mr. Waxman. I'm going to ask to see if anybody else wants to comment on the sanctions. Mr. Kent. Mr. Kent. Yes, I believe it is correct. Because the way I have seen what's going on right now, particularly with the German Foundation, and the way they want to implement it, whatever they like, Allianz wanted. Whatever they don't like it, they don't want it. So unless there would be a strong sanction by our government to protect our rights, not insurance company's right, then I would say they will continue doing what they are doing because it reminds me of the very famous story which the Russians said to the Pope how many divisions do you have? If you don't have something that we can hold over their heads, then they will do what they're doing right now, and the German Foundation is the perfect example. You asked, Congressman Waxman, about the expenses. They had no right to ask for it. MOU companies are subject to the MOU, not to the German Foundation. Before I finish I just want to mention one thing. I am sorry, Congressman Waxman, if I raised my voice to you. I'm not a youngster. I spent a lot of time working on the German Foundation and I took a lot of abuse what I heard from the Germans and other things. I don't want to see anybody being abused. I have learned during the war that one cannot be a bystander. You have to take sides. You cannot be neutral. Mr. Waxman. I appreciate that and I regret that--if I---- Mr. Kent. I raised my voice but it was in---- Mr. Waxman. I regret if I raised my voice to you or to Secretary Eagleburger, but I do believe--everybody, you should understand--that Congress has a role to play. When our constituents are complaining that their claims aren't being paid and they're being ignored, then I think we have to pay attention to it, and when we look at the data, we see the high expenditures by ICHEIC and the meager results and I think the committee should be investigating first and then deciding on appropriate legislation. That's our job. I introduced a bill that you all are aware of that would require companies doing business in the U.S. to list their names, list the names of the insured. I certainly don't want to question people's motives, and I accept people's sincerity and their intentions. But I think absolutely that's fair for Congress to look into ICHEIC, to look into the insurance companies, to look at the results which I have to say are very disappointing. But let me go back to some of these other questions. Ambassador, I want to know, Mr. Bindenagel, under the German agreement, the United States makes statements of interest. Is my understanding accurate that the criteria for receiving the benefit of the statement of interest does not take into account whether a company has agreed to comply with ICHEIC procedures? Mr. Bindenagel. That's correct, Mr. Waxman. The eligibility for the statement of interest is in the U.S. foreign policy that the Foundation and therefore ICHEIC be the exclusive remedy for resolving these issues and we will file statements of interest in the U.S. foreign policy. Mr. Waxman. Do you believe that the United States should file statements of interest advocating dismissal of claims against companies that refuse to comply with ICHEIC procedures? Mr. Bindenagel. If the operations of ICHEIC are functional and they do not work, then they have the claimants, the plaintiffs, and others have the right to reopen the cases, as I said before. Mr. Waxman. Since there are concerns about the effectiveness of ICHEIC, is the State Department reconsidering its position? Mr. Bindenagel. The State Department is not reconsidering its position and I must take this opportunity to respond to your offer to comment on sanctions. It is not in our view the right time for sanctions at this point, as you can tell. These issues are very emotional, contentious, and we would like to focus all of the attention, all of the energy of all of the parties on the resolution of these issues that you've raised here today--audits, appeals, lists, and costs. We would like all of the attention to be focused on those issues and the resolution of those issues, not be diverted by issues of threats and sanctions. They're out there. We know that. The insurance commissioners have made safe harbor issues a concern. There are possibilities of reopening these cases if the legal cases don't work. All of the energy, sir, should be directed toward the resolution of these issues. We have 550 million marks that's available to pay claims and 350 million marks of that to make humanitarian payments for people who waited too long for those payments. Thank you. Mr. Waxman. During the July 17, 2000, signing ceremony of the U.S.-German agreement, U.S. Holocaust Envoy Stuart Eizenstat said, ``It is critically important that all German insurance companies cooperate with the process established by ICHEIC. This includes publishing lists of unpaid insurance policies and subjecting themselves to audit. Unless German insurance companies make these lists available through ICHEIC, potential claimants cannot know their eligibility and the insurance companies will have failed to assume their moral responsibility.'' If participation in ICHEIC procedures is not a criteria for receiving the benefit of a U.S. statement of interest, how is the U.S. Government continuing to exert pressure on these companies and the other companies at ICHEIC to publish policyholder names? Mr. Bindenagel. I must say, as I have indicated, both prior to the change of administration and in this administration, we have worked very closely with all of the parties here at the table and those not at table to do just that. You heard the representative from Allianz Fireman's Fund say that there are 140,000 names that they have submitted to ICHEIC. That is indeed a principal point that, yes, indeed lists---- Mr. Waxman. I think that he said he submitted to Yad Vashem. Mr. Bindenagel. No, to ICHEIC. Mr. Shapo. To ICHEIC. Mr. Bindenagel. For checking with Yad Vashem. Indeed that is a signal that we want to have. Those people who have potentially the ability to make a claim need to have those lists. We have made that very clear. The parties are themselves negotiating the details of that agreement. Mr. Waxman. I also understand the U.S. Government is committed to continuing to file statements of interest in cases after the February 2002 ICHEIC deadline for filing claims passes, yet serious concerns have been raised that ICHEIC member companies have not yet published these lists of policyholders that would facilitate the filing of claims and many other insurance companies have not even agreed to join ICHEIC procedures and haven't provided any names. In light of this does the State Department believe that the February 2002 deadline should be extended? Mr. Bindenagel. Mr. Waxman, the State Department doesn't take a position on any particular issue. I think we've made it very clear in the first part of your question. Indeed we are committed to filing statements of interest, and the second with regard to publication of lists we have made it clear that is a very important part for the public confidence that ICHEIC is doing what it set out to do. The actual negotiations themselves over the date and the deadline is an issue for the members of ICHEIC to make themselves. Mr. Waxman. One moment. I want to thank all of you. I still have additional questions, but I'm going to ask the chairman's indulgence to--and members of this panel--to submit questions in writing so that we can receive responses in writing and have them on the record. There are a number of areas of detail that I think we ought to pin down. Rather than take the time here to go through all of them, particularly since many of you may have to check your records, it would be I think beneficial for us all to get a response in writing for the record. So with that request, Mr. Chairman, I would hope the members of this panel will respond to those questions and respond in writing for us and in as prompt a manner as possible. We'll outline that in the letter to them. Mr. LaTourette [presiding]. Without objection, the gentleman's request will be entered into the record and the Chair would ask for the cooperation of the panel. And I just have a few housekeeping matters, if I could take Mr. Waxman's indulgence, and then if you have some additional questions, we could finish. Mr. Eagleburger, starting with you and it stems from questions that Mr. Waxman was talking to you about. It relates to a letter that you sent to the committee, I think yesterday, relative to the expenses under the MOU. In that letter you referenced the fact that no expense money has been received from the participating insurance company since August 2000. Mr. Eagleburger. Right. Mr. LaTourette. You went on for a little bit of time in your response to one of the questions to Mr. Waxman and I think also in the letter that you sent to us you believe that the money, which I believe totaled $60 million if I understand things correctly, is being withheld as some form of punishment for decisions that you've made. Is that your belief? Mr. Eagleburger. Yes. And it was not only withheld. We'll never see it. But the companies first agreed--and this was the first meeting of ICHEIC. I asked the companies to agree to in effect a $90 million escrow account just to demonstrate their goodwill. They finally agreed to it. They paid in $30 million and have never paid anything since, and I was told by representatives of the companies that they were withholding it because they were unhappy with some of these decisions I had made, that it is--the $60 million has not been forthcoming, and I do not believe it will be, sir. Mr. LaTourette. Can you give us an example for the record of an example of one of the decisions that you made that you think has caused them to lead to this conclusion? Mr. Eagleburger. I thought you might ask and I've got a list of them here. Hold on a minute. Because it's a fair number but I will only give you a few--if I remember where I put it. Anyway the point is, for example, valuation of Eastern European policies. What formula do you use to value an Eastern European insurance policy that was written say in 1935? And that has caused--I hope I don't have to explain what the valuation was because I couldn't. I mean what the process was. It's fairly complicated. But the companies were very unhappy with that. Valuation of German insurance policies, some insurance policies, and what to do about blocked and confiscated policies, many of which were confiscated during the Holocaust, many of which were just blocked so they couldn't be paid, and I issued the decision which said that in both cases those policies should be honored by the companies and, in other words, they would--if we found a blocked or confiscated policy that fell within the purview of the ICHEIC process that companies would have to pay it. And then there was another one, for example, on what should the companies do about paying on nationalized policies where, for example, the company would have owned a company in Poland, which was then nationalized by the Communists immediately after they took over, and again I ruled that those policies should be paid. And that also did not make the companies very happy. There are some others if I thought more about it, but it's those kinds of things. Mr. LaTourette. Let me, Mr. Lefkin, to you, is it accurate that Allianz has cutoff payment to ICHEIC since August 2000? Mr. Lefkin. Allianz has been operating--is actively involved working with Mr. Eagleburger and Mr. Sher on the Financial Oversight Committee. I am not privy to those discussions. I do know that Mr. Eagleburger--what I've heard is there is adequate funding now and that there are a number of issues that are being discussed, but ICHEIC is in no imminent danger of being closed down certainly. Mr. LaTourette. And I apologize because I got here late because of other business and the way the Congress works is you come late, they make you the chairman. So I got to be the chairman, but I thought I heard Mr. Eagleburger indicate that no money has been paid since August 2000, and while he can keep going for a while he's not so sure, and I think he said Armageddon is coming or some other appropriate expression. So my specific question, and if you don't know the answer, I'd ask that you submit it for the purposes of the record: Are you aware as to whether Allianz has paid any money to the Commission since August 2000? Mr. Lefkin. I'm not aware of that. I'll investigate that for you, Congressman. Mr. LaTourette. Did you hear Mr. Eagleburger's abbreviated list, he said it wasn't all-inclusive but he indicated that there was a list of decisions that he had made in his capacity that had frustrated or not pleased the company. Are you aware of those decisions? Mr. Lefkin. I'm aware of those decisions, yes. Mr. LaTourette. And is it your understanding that your company is one of the ones frustrated by his decision? Mr. Lefkin. Not particularly. I mean there are five companies part of the Commission. Some of the decisions frankly were not that controversial. Some of them were. There's always varying degrees of debate. Even after some of those decisions were made the funding still continued. I believe, as Mr. Eagleburger or Mr. Sher said, the last check was received I think in August 2000. Many of the decisions that Mr. Eagleburger cited as having companies' disfavor were made before that date. Mr. LaTourette. The specific question I would be interested having your company answer in writing is, one, have you made any payments since August 2000 based upon his observations and, if not, how do you believe that complies with the MOU that was entered into? Ambassador, to you, there was some discussion about sanctions and what do we do about it and so forth and so on and a lengthy discussion about these letters of interest that are filed in litigation. If I have that right, what happens is when a claim is filed the government pursuant to this agreement files a letter of interest, and these cases are then dismissed without prejudice so that at some point there isn't a satisfactory resolution that the plaintiff could come back and refile in the appropriate forum. Is that correct? Mr. Bindenagel. That's my understanding. I do want to point out that in the cases in which we have filed statements of interest, the U.S. Government is not the only one who has asked for dismissal but the plaintiffs as well, the defense, and in some cases special masters of the court have also asked for dismissal so that when we supported this Foundation and the Foundation supports the International Commission here, it's really together with all the parties. It's not in opposition. Mr. LaTourette. I know. I understand that. But my limited experience, I haven't practiced law since I came to Congress, but I haven't met a Federal judge yet that wouldn't rather clear his docket than move things along especially with the spate of appointments by all administrations have left vacancies all over the country for political reasons in my opinion, and it seems to me that may be an opt out that people are choosing. The difficulty in claims like this that are 50 or 60 years old is you have claimants who are not getting any younger. The opportunity whereas a young person like Mr. Waxman wanted to dismiss something without prejudice and come back and file it later may not be available to someone in their 70's or 80's who has been waiting a very long time to settle a claim. But the question I specifically have, though, is what is the State Department doing? If Mr. Eagleburger's observation is right, and I believe that it is, that Armageddon is coming and that no payments have been made pursuant to this agreement, which leads to our foreign policy of entering these letters of interest, and they haven't paid any money since August 2000, what is the State Department doing to encourage these folks to do what it is they're supposed to do that then gives them a benefit, I would suggest, in our legal system? Mr. Bindenagel. In fact, in my written statement I have outlined many things that we've been doing. Since this administration took over and reaffirmed the position of Special Envoy, we have engaged with all the parties in not only the insurance issues but the whole range of issues. Mr. Armitage has taken up these issues directly with the German Government on a regular basis, and I have spent much of my time since the change of administration trying to help create an atmosphere of cooperation so that these issues could be addressed. I have spent many times directly dealing with all the people at the table here, trying to keep the focus on the issues. As you can tell, it's a very emotional and sensitive issue and very often gets off the rails, if you will. And I have traveled extensively in Europe, meeting individuals and we have focused on the four issues that we have been talking about here today, appeals, audits, lists, and costs. The attention that's been spent and the deep level of detail is for the negotiators to deal with, but we have tried and I think so far succeeded in increasing the pace of the negotiations. Mr. Eagleburger has called together negotiations with the German Foundation repeatedly. If there's a complaint it is that it has taken up too much of the time, as you heard from some of the other panel members. We've been very intensively operating and trying to resolve these issues because there's--550 million marks was negotiated, is deposited, is available for paying claims and for making humanitarian payments. Mr. LaTourette. If I understood, and if I haven't understood it correctly, correct me, but the agreement seems to be working well or at least better on the slave labor side than it is on the insurance side. I thought I heard you say that, and I think that I would agree with that. On the insurance side, though, relative to U.S. foreign policy, if the companies are not willing to honor their commitments, and that if the commitment was made to Mr. Eagleburger to give him $90 million to do his job and he's made them mad with some of the things that he's done and so now they're withholding money so that he can't do his job or they starve him out, what observation would you like to make relative to continued U.S. foreign policy? I mean we are basically giving these companies legal peace in the United States in exchange for doing what it is they said they were going to do. When do we reach the conclusion, even if they're doing a bang-up job in the slave labor side, that they're not doing what they agreed to do on the insurance side and do you think that we're close, as Mr. Eagleburger indicated, or do you think that's a ways down the road? Mr. Bindenagel. Mr. Chairman, I think you have by holding this hearing today brought everyone's attention to this issue, including all of the negotiating partners. I think that's a rather major contribution to this process. I understand Mr. Eagleburger's concern and skepticism with the outcome. I will confirm his comment earlier that I am optimistic that we will achieve an agreement. The agreements that we have made are not at issue with the exception of the fulfillment of the company's financial commitments. That has not been done. The issue was diverted by the Foundation and we will hold them to the agreements that they have made. Mr. LaTourette. Is there a trigger that you're aware of in U.S. policy or sort of a drop dead date that, hey, if you guys don't fork over the other $60 million, we're not going to file these letters of intent that--I understand the plaintiff and defendant still have to come forward and say yeah, we would like to dismiss it at this moment too, but clearly when the U.S. Government gets involved and files a letter of interest, it's not like me calling up and saying I'm kind of interested in this case, can I file an amicus brief? You bring the full weight and authority of the Federal Government and it can't be lost on anything that is what the government would like them to do at that moment in time. But is there a moment in time that you think we're heading toward that we're going to be done with it? Mr. Bindenagel. There's a moment in time each time there's a case and each time the government consults obviously also with the Justice Department as we go through this process for each case, that is the moment where we review where we are and whether or not they have done what they have agreed to do. Mr. LaTourette. Mr. Kent. Mr. Kent. Mr. Chairman, if I may throw in another halfway educated guess why the payments are not forthcoming, and I believe it's simply for the reason that Allianz wants to get all their expenses paid, which is completely contrary to the MOU. So what they are doing, they are withholding the payment and they feel that this way they are not paying the 550 million unless they're going to get paid their expenses. They could get it over my dead body because they have signed MOU and they are responsible for the expenses just like every other company. This example also is being amplified because the other insurance companies also say if they are not paying, why should we pay? Very normal human reasons. So that you have a domino effect what the German Foundation created, and Mr. Bindenagel is correct when he stated that the slave labor part of it is working, but the insurance which had no part to be there is not working, and it's not working because of one company, Allianz and the Insurance Association, because they want what they want. They want a pound of flesh. Don't want to pay and in this particular issue, let me tell you my own feeling. When we spoke about slave labor. To me it was strictly a moral and ethical issue. I never spoke during the negotiation about money. It was only a moral and ethical issue. This particular case, the insurance is a moral issue, yes, but it is also a monetary issue because the insurance companies--I am a lay person. I say they stole the money from the people that had the policies. They kept it for 60 years. So I said it once to Mr. Hansmeyer, I don't blame you for what your fathers did in Auschwitz and other camps, but I am blaming you for what you're doing right now because you know or you should know that you had in your Treasury hundreds of millions of dollars which did not belong to you. It belonged to the people, so---- Mr. LaTourette. Thank you. Mr. Lefkin, is there anything you would like to say that obviously---- Mr. Lefkin. The only thing I would like to add is the estimated size of the unclaimed insurance policies arising from Germany is about $30 million. At least that was a fairly liberal estimate that was agreed to during the context of the German Foundation negotiations. There has been 550 million Deutsche marks allocated to this. So I think there is more than enough money in the German Foundation compensating to satisfy the needs of all the individual policyholders. And again these are very complex negotiations. They are operating under the context of a German law which was negotiated in part with the Jewish organizations and the U.S. Government. I think it's going to work. I can tell everyone's frustration at this table is probably shared universally, even in Europe, but ultimately you're dealing with people of goodwill and ultimately you have 550 million Deutsche marks on the table which should satisfy all individual insurance claimants. Mr. LaTourette. Mr. Taylor, is there something you'd like to say, sir? Mr. Taylor. Yes. I just don't want to let the record show that there was any sense of agreement from the Jewish side in those negotiations that the exposure of Allianz or German industry was $30 million. Without repeating the negotiations, the argument was it was a considerably higher sum involved in the insurance policies issued by Allianz and by the subsidiaries of Allianz. Mr. LaTourette. Thank you, Mr. Taylor. Mr. Lefkin, just for the record, where did that figure that you used, $30 million, come from? Mr. Lefkin. It was one of the estimates that was used, and again I was not privy to the negotiations, but what I understand was that when they arrived at the sum as to what was the size of the unclaimed insurance policies in Germany, and that includes all German companies, not just Allianz, which has about a 15 percent market share, historical market share, it was estimated--and I don't know exactly by whom or by--but the number was agreed to of about $30 million. The German Insurance Association actually believed that's probably much larger than what it really is. Nonetheless, I think the important thing is that there is more than enough money in the Foundation to cover the needs of individual policyholders. Mr. LaTourette. Mr. Singer has made the point before and Mr. Kent I think has made it again that there is a sum of money there and the only explanation that Mr. Singer at least could offer to the committee as to why we're not moving faster is that the companies are dragging their feet. What would your observation be about that? Mr. Lefkin. Companies aren't really parties to the Foundation negotiations. They're being led, and Chairman Eagleburger mentioned this before, they're being led by a very capable diplomat, Ambassador Brautigam, who was the former German ambassador to the United Nations. So I really can't comment beyond that. There are some very complex issues. Mr. Bindenagel certainly referred to some of them, and perhaps I would probably toss those questions over to either of them, who might be able to elaborate further. Mr. LaTourette. Let's go to Mr. Eagleburger. He had his hand up. Mr. Eagleburger. Well, Mr. Lefkin is a good friend of mine. I like him dearly. He doesn't know what's going on in this particular case. I can assure you that what happens is that Mr. Brautigam, Ambassador Brautigam, the German negotiator, at the end of these meetings goes back to Germany and clearly has to brief, debrief the various insurance companies that are his constituents and he may make suggestions to the companies about how they ought to respond to these issues, but he is totally in the hands of the companies as to what they will agree to. He is not an independent operator in this regard, and so the German insurance companies do in fact have substantial influence on the positions taken in the negotiations and most of the time those influences are in my judgment less than creative. Mr. LaTourette. Mr. Shapo, what would you like to share with us? Mr. Shapo. Thank you, Mr. Chairman. It just can't be said that the companies have no part in this and that they're innocent bystanders, exactly as the chairman has described. Ambassador Brautigam has to go back to the companies and try to convince them to accept what we've negotiated. Precisely as my answer to Congressman Waxman's question when he asked about how negotiations went in London, the problem with the lists was that we were waiting for information back from the companies that had been raised in our previous meeting. We had asked a series of questions and Ambassador Brautigam has been diligently working to get back those answers, but the companies hadn't been provided them yet, and that's why we didn't get further on lists yesterday than we had hoped to. Mr. LaTourette. Ambassador, I'll get to you in a second, but Mr. Lefkin, Mr. Shapo brings up a point that I wanted to ask you. Can you explain to the committee why it took 2\1/2\ years to--I heard you say over 100,000 names to ICHEIC and are being examined by Yad Vashem, but is there some explanation why it took Allianz 2\1/2\ years to produce whatever it is you did for this? Mr. Lefkin. Actually the sequence of events, Congressman, was that we reached an agreement with Mr. Bobby Brown, representing the State of Israel, and with Chairman Eagleburger, I believe it was the October meeting of 1999, and we submitted names over to ICHEIC for distribution to Yad Vashem early in the year 2000, I think January or February of that month. What we do know is that there have been processing problems in Yad Vashem, and I don't know all the reasons why they have not been processed, but our company has fulfilled its obligations in transferring them over to ICHEIC to be transferred over to Yad Vashem. Mr. LaTourette. So the premise of my question, it took 2 \1/2\ years--you think it took a couple of months after an agreement was reached and when I say it took 2\1/2\ years, I'm wrong in that regard. Mr. Eagleburger. Mr. Eagleburger. I want to explain the Yad Vashem issue and it was something we got stuck in the middle of that we had nothing to do with. To make a long story short, IBM had its subsidiary along the line--had done some work for the Volcker Commission in terms of using Yad Vashem for some of their activity and IBM was unwilling for some period time after the-- when we wanted to--when we went to Yad Vashem and Yad Vashem wanted to use this software, IBM was for some very lengthy period of time totally unprepared to let us do that without a payment of what, it was $1 million or something like that? About $1 million. And I wasn't ready to pay $1 million. So finally the issue was resolved with no payment but it took some time, and that's why there was the delay and it was certainly not--it's one of the few times I would have to tell you that Allianz wasn't at fault. Mr. LaTourette. Thank you. Ambassador, is there something you wanted to say relative to our last question? Mr. Bindenagel. I did. Thank you, Mr. Chairman. The issues are going back and forth here and the reason that the U.S. Government wants these issues resolved is because ultimately it goes to the international agreement that we reached with the Federal Republic of Germany, and the two governments are politically responsible for ensuring that these agreements are implemented fully. Mr. LaTourette. OK. Thank you very much. I don't have any more questions on this subject. I'll turn back to Mr. Waxman to see if he has anything more in a minute, but I did promise a constituent of mine that I would ask, Ambassador, this of you because of what it is you do for a living and it doesn't have anything to do with ICHEIC; so all you ICHEIC guys can sit back and take a deep breath and I'm done with it. There are two gentleman that live in my district that I represent east of Cleveland, OH, places like Beachwood and Pepper Pike and other places like that in northeastern Ohio and they have to do with property in Poland and we've made contact with the State Department. We've made other contacts and we can't seem to quite crack the code and tell these folks where to go and let me just briefly describe the two situations. The one gentleman who was confined to Auschwitz and still survives today. His family operated and owned a bus company in Poland that was expropriated, and the second gentleman was a lottery agent, a Polish lottery agent and deposited $100,000 as a bond for the lottery tickets that he sold. He was a bonded lottery agent. That also has never been returned by the Federal Government. I'm aware that the Helsinki Commission provides property claims in former Soviet Republics where property was, but I don't know if there exists a comparable entity to assist in these cases, and my question to you is, is there any internationally coordinated effort by the U.S. Government to authorize holocaust survivors to bring direct claims for confiscated property against the Polish Government directly or through any international organization that you're aware of? Mr. Bindenagel. Mr. Chairman, no, I'm not aware of it, but I'd be glad to take the question and get you an answer. Mr. LaTourette. If you could, I have it written out and I'll be happy to hand it to you when we're done and my constituents would very much appreciate the guidance because like these folks with the insurance polices they have been waiting a very long time for an answer. I don't---- Mr. Kent. Mr. Chairman, I could answer you the question so far to the best of my knowledge. Mr. LaTourette. Sure. Mr. Kent. There is no agreement between our government and the Polish Government. I could add, however, that there are some conversations between the--in the group, in other words, the Jewish part in the Polish Government but they are still not under the auspices of our government. So far they were not successful so--but negotiations are---- Mr. LaTourette. I thank you. Mr. Taylor, do you want to add? Mr. Taylor. If I could just add, I think this issue of private property restitution in Poland is one that has received some attention but not adequate attention, and perhaps it is something that this committee and the U.S. Congress would look at because I think it does raise some important issues and we do see a role for the U.S. Government and the Congress to try to encourage this issue to be treated, dealt with in a serious and comprehensive manner. Mr. LaTourette. Thank you. I don't have any more questions. Mr. Waxman. Mr. Waxman. Thank you very much, Mr. Chairman. Mr. Eagleburger, the insurance company Winterthur told the committee that the ICHEIC rulings are not binding upon members of ICHEIC. Do you agree with that position? Mr. Eagleburger. No, I don't. And I had heard this view expressed. This was some months ago now. I went out with a questionnaire to each of the companies and asked, ``Do you believe that my decisions are binding or not?'' And to the degree I could--the responses were obviously written by someone who was a crafty--it was very hard to figure out what their answers were is the best way to put it, but my view is that they are bound by these decisions and if they don't follow them, I--and that's why I want to check on what is going on in the various companies in terms of policy claims responses and so forth. If they aren't following them, I will certainly make it public and--which is about the best I can do, but at the same time will also make it clear that as far as I'm concerned they have not met their obligations under ICHEIC and that anyone who wishes a quarter, whatever, can take that for whatever they wanted to use it for. And I should mention related to this, if I may, one of the things I should have mentioned earlier in terms of when you asked the question about sanctions, let us not forget--and I don't want to put words in his mouth, but let us not forget that we do have State insurance regulators and that depending upon the degree of the crime, if you will, they also have substantial authority over these insurance companies. For example, if the companies do not follow my directives, one of the things I'm going to do right away is turn to the insurance regulators of the States and say I think it's time you took a hard look at whether you want to continue to stand aside and not sanction yourself. Mr. Waxman. Mr. Shapo. Mr. Shapo. Thank you, Congressman. And I'd just put out again for the record that the resolution that I wrote and that we passed in the United States explicitly brings up the possibility of further regulatory actions in the resolved paragraphs and it enumerates the types of actions that could lead to by myself and my colleagues. Mr. Waxman. Mr. Lefkin, what do you have to say about the comment by Winterthur that they don't feel that ICHEIC rulings are binding on them? How does your client respond? Mr. Lefkin. I would prefer not to comment on a statement made by another company. Mr. Waxman. Does your company feel that the ICHEIC decisions are binding on you? Mr. Lefkin. We have always abided by all the ICHEIC decisions. Mr. Eagleburger. Is that a yes or a no? Mr. Waxman. To pin you down, do we want to assume that's a yes or a no, Mr. Lefkin? Mr. Lefkin. That every decision he has made we have complied with, and I cannot predict with any degree of accuracy in the future what will transpire but we've always tried to work in a cooperative manner. Mr. Waxman. Mr. Shapo. Mr. Shapo. Congressman, Mr. Hansmeyer from Allianz wrote a letter to Chairman Eagleburger on September 18 saying that ``I hope you understand that, under these circumstances, we cannot abide by these decisions.'' Mr. Waxman. In closing, I want to return to Mr. Eagleburger because we had a heated exchange earlier this afternoon when I got to the issue of expenses, and I want to make it clear to you that I'm not questioning your motives or intentions. You've stated forcefully your desire to help claimants, and I don't question that. But I do think that this committee should get answers to some of these questions that we were going to ask of you and have already asked of you. Chairman Burton and I requested that ICHEIC break down its administrative expenses by the following categories: Salaries, office-related expenses, meetings and conferences, outreach to Holocaust survivors, and claims processing. ICHEIC only provided information on outreach and claims processing. At least $12 million of the $40 million expenses is unaccounted for. I'm going to ask, if you would, to respond to a letter that we will send you to further elaborate on how much is spent on salaries, how much is spent on meetings and conferences, and I would hope you would cooperate with us, Mr. Eagleburger. Mr. Eagleburger. If you want a yes or a no, I'll have to look at the letter, Mr. Waxman, and then I'm get back to you. Mr. Waxman. Well, I will hope that you will get back to us and give us the information that I think we are entitled to as a committee that has legislative jurisdiction, jurisdiction to investigate any matter that is relevant to Federal legislation. I've indicated I've already introduced Federal legislation. We have a clear interest in this issue, as do you and as do others at this table. And when people are aggrieved they go to their representatives, and as their representatives we want to get answers and explore fully what has been going on in this whole area. There seems to be, whoever's fault it may be, a lot of money spent for very little results for the people who need the results, and those are the people who are waiting to have their insurance company claims paid for. But I think this hearing has been helpful. I think this hearing has been useful. Mr. Shapo, let me ask you--my staff wanted me to request of you Allianz's letter that you referred to so we can have that for the record. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T7710.083 Mr. Waxman. I thank you all for your participation, and while sometimes we have been antagonistic, that is not the purpose. I want to work with all of you to make sure we get this job done for the people that are asking for the assistance. Mr. LaTourette. I thank the gentleman, and I join Mr. Waxman. It has been a long afternoon. Thank you for your observations to the committee. And if a request has been made for you to followup on the record, we ask that you do that at your earliest convenience. And, Mr. Shapo, I guess you are going to have the final word. Mr. Shapo. Can I make one just very quick observation? It has to do with the claims process and the way it has been driven. I think it's implicit in some of the remarks, and I'm not sure it was stated explicitly, and that is the Commission made an explicit policy choice to encourage inquiries and claims. The ad that was put out said, suppose your family had a Holocaust-era insurance policy, and you just didn't know about it. Certainly that is designed to encourage people to err on the side of caution and perhaps to--perhaps has had the effect of probably encouraging more claims than it would if you took another philosophy and only encouraged people that knew with 100 percent certainty that they had a claim. And that has certainly led to a high number of claims, but it has led to more--gross number of valid claims being higher. And unfortunately, some of us have been disappointed that the companies have not been giving more of the benefit of the doubt to claimants who have been given a basic presumption of a claim, and that is something that we are seeking to work out. But that is something I wanted to make sure that I had a chance to say for the record. And also I wanted to say for the record that the chairman at all times fiercely and jealously insists on respect for survivors. He doesn't always insist on respect for me, but---- Mr. LaTourette. I thank you all very much, and this hearing is adjourned. [Whereupon, at 4:50 p.m., the committee was adjourned.] [The prepared statement of Hon. 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